We have studied spectroscopic properties of the 16kDa red carotenoid protein (RCP), which is closely related to the orange carotenoid protein (OCP) from cyanobacteria. Both proteins bind the same chromophore, the carotenoid 3′-hydroxyechinenone (hECN), and the major difference between the two proteins is lack of the C-terminal domain in the RCP; this results in exposure of part of the carotenoid. The excited-state lifetime of hECN in the RCP is 5.5ps, which is markedly longer than in OCP (3.3ps) but close to 6ps obtained for hECN in organic solvent. This confirms that the binding of hECN to the C-terminal domain in the OCP changes conformation of hECN, thereby altering its excited-state properties. Hydrogen bonds between the C-terminal domain and the carotenoid are also absent in the RCP. This allows the conformation of hECN in the RCP to be similar to that in solution, which results in comparable excited-state properties of hECN in solution. The red-shift of the RCP absorption spectrum is most likely due to aggregation of RCP induced by hydrophobic nature of hECN that, when exposed to buffer, stimulates formation of assemblies minimizing contact of hECN with water. We suggest that the loss of the C-terminal domain renders the protein amphipathic, containing both hydrophobic (the exposed part of hECN) and hydrophilic (N-terminal domain) regions, and may help the RCP to interact with lipid membranes; exposed hECN can penetrate into the hydrophobic environment of the lipid membrane, possibly to provide additional photoprotection.