Single molecule spectroscopic techniques and fluorescent carbocyanine dyes are used extensively to infer dynamics of native membrane lipids. However, the precise distribution and orientation of the dye in a bilayer and how well the dye dynamics mimic native lipid dynamics is not known. Thus, we simulated a fully-hydrated lipid bilayer comprised of 128 DPPC molecules and 0, 2, or 4 DiI molecules. These studies provide the first atomic, molecular, and intermolecular scale analysis of this popular dye and provide important quantitative parameters to help interpret fluorescence lifetimes and diffusion measurements obtained from time-resolved florescence correlation spectroscopy (FCS).