Indocyanine Green (ICG) is a clinically approved organic dye with near-infrared absorption and fluorescence. Over the years, many efforts to improve the photophysical and pharmacokinetic properties of ICG have investigated numerous nanoparticle formulations, especially liposomes with membraneembedded ICG. A series of systematic absorption and fluorescence experiments, including FRET experiments using ICG as a fluorescence energy acceptor, found that ICG transfers spontaneously from liposomes to albumin protein residing in the external solution with a half-life of ∼10 min at 37 °C. Moreover, transfer of ICG from liposome membranes to external albumin reduces lightactivated leakage from thermosensitive liposomes with membrane-embedded ICG. A survey of lipophilic liposome additives discovered that the presence of clinically approved antioxidant, α-tocopherol, greatly increases ICG retention in the liposomes (presumably by forming favorable aromatic stacking interactions), inhibits ICG photobleaching and prevents albumin-induced reduction of light-triggered liposome leakage. This new insight will help researchers with the specific task of optimizing ICGcontaining liposomes for fluorescence imaging or phototherapeutics. More broadly, the results suggest a broader design concept concerning light triggered liposome leakage, that is, proximity of the light absorbing dye to the bilayer membrane is a critical design feature that impacts the extent of liposome leakage.