In the present frame of work, optical bistability using a Fabry–Perot (FP) cavity containing 4-dicyanomethylene-2-methyl-6-p-dimethylaminostyryl-4H-pyran (DCM) dye entrapped in poly-methylmethacrylate (PMMA) matrix is experimentally investigated. Optical nonlinear behavior of solid-state samples is studied using a single-mode Q-switched nanosecond Nd:YAG laser operating at 532 nm. Various optical nonlinear parameters such as nonlinear refractive index (n2) and third-order susceptibility (χ3) of the material are numerically estimated from bistability loops. The origin of optically bistable behavior is attributed to photoisomerization-assisted nonlinear refraction phenomenon. It is observed that nonlinear refraction dominates over nonlinear absorption in giving rise to the optical bistability. The study shows that DCM dye entrapped in solid-state matrices are promising candidate for polymer-based optical switches, data processing, and communication systems.