Signal-Transducer-and-Activator-of-Transcription 3 (STAT3) protein plays an important role in the onset of cancers such as leukemia and lymphoma. In this study, we aim to test the effectiveness of a novel peptide drug designed to tether STAT3 to the phospholipid bilayer of the cell membrane and thus inhibit unwanted transcription. As a first step, STAT3 proteins were successfully labelled with tetramethylrhodamine (TMR), a fluorescent dye with suitable photostability for single molecule studies. The effectiveness of labelling was determined using fluorescence correlation spectroscopy in a custom built confocal microscope, from which diffusion times and hydrodynamic radii of individual proteins were determined. A newly developed fluorescein derivative label (F-NAc) has been designed to be incorporated into the structure of the peptide drug so that peptide-STAT3 interactions can be examined. This dye is spectrally characterized and is found to be well suited for its application to this project, as well as other single-molecule studies. The membrane localization via high-affinity cholesterol-bound small-molecule binding agents can be demonstrated by encapsulating TMR-labeled STAT3 and inhibitors within a vesicle model cell system. To this end, unilaminar lipid vesicles were examined for size and encapsulation ability. Preliminary results of the efficiency and stability of the STAT3 anchoring in lipid membranes obtained via quantitative confocal imaging and single-molecule spectroscopy using a custom-built multiparameter fluorescence microscope are reported here.© (2009) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.