Dendra2 is an engineered, monomeric GFP-like protein that belongs to a subclass of fluorescent proteins undergoing irreversible photoconversion from a green- to a red-emitting state upon exposure to purple-blue light. This photoinduced process occurs only in the neutral state of the chromophore and is known to result from backbone cleavage accompanied by an extension of the delocalized pi-electron system. We have measured the X-ray structure of the green species of Dendra2 and performed a comprehensive characterization of the optical absorption and fluorescence properties of the protein in both its green and red forms. The structure, which is very similar to those reported for the closely related proteins EosFP and Kaede, revealed a local structural change involving mainly Arg66 and a water molecule W4, which are part of a charged and hydrogen-bonded cluster of amino acids and water molecules next to the chromophore. Unlike in EosFP and Kaede, Arg66 of Dendra2 does not contribute to negative charge stabilization on the imidazolinone ring by hydrogen bonding to the imidazolinone carbonyl. This structural change may explain the blue shift of the absorption and emission bands, as well as the markedly higher pKs of the hydroxyphenyl moiety of the chromophore, which were determined as 7.1 and 7.5 for the green and red species, respectively. The action spectrum of photoconversion coincides with the absorption band of the neutral species. Consequently, its 20-fold enhancement in Dendra2 at physiological pH accounts for the higher photoconversion yield of this protein as compared to EosFP.