Determination of the depth of membrane penetration provides important information for studies of membrane protein folding and protein-lipid interactions. Here we use a combination of molecular dynamics (MD) simulations and depth-dependent fluorescence quenching to calibrate the methodology for extracting quantitative information on membrane penetration. In order to investigate the immersion depth of the fluorescent label in lipid bilayer, we studied 7-nitrobenz-2-oxa-1,3-diazole (NBD) attached to the lipid headgroup in NBD-PE incorporated into POPC bilayer. The immersion depth of NBD was estimated by measuring steady-state and time-resolved fluorescence quenching with spin-labeled lipids co-incorporated into lipid vesicles. Six different spin-labeled lipids were utilized: one with headgroup-attached Tempo probe (Tempo-PC) and five with acyl-chain-labeled n-Doxyl moieties (n-Doxyl-PC where n is a chain labeling position equal to 5, 7, 10, 12, and 14, respectively). The Stern-Volmer analysis revealed that NBD quenching in membranes occurs by both static and dynamic collisional quenching processes. Using the methodology of Distribution Analysis, the immersion depth and the apparent half-width of the transversal distributions of the NBD moiety were estimated to be 14.9 Å and 6.7 Å from the bilayer center. This position is independently validated by atomistic MD simulations of NBD-PE lipids in a POPC bilayer (14.4 Å). In addition, we demonstrate that MD simulations of the transverse overlap integrals between dye and quencher distributions can be used for proper analysis of the depth-dependent quenching profile. Finally, we illustrate the application of this methodology by determining membrane penetration of site-selectively labeled mutants of diphtheria toxin T-domain.