Indocyanine Green (ICG) is one of the most common fluorescent dyes that emits in the near-infrared (NIR) region, with extensive use in the medical field. However, this dye is susceptible to photobleaching, thermal degradation and oxidation in acidic conditions. The major pathway by which ICG photobleaches involves sensitization to form singlet oxygen, which can react with the dye’s backbone, resulting in decomposition to non-fluorescent debris. In this paper we introduce the concept of using energy transfer (ET) for the protection of NIR dyes against photodecomposition. The dye IR-1061 was chosen as an ET pair due to its spectral overlap with ICG. First, it was shown that the presence of the former in solution reduced disintegration of the latter by absorbance and fluorescence spectroscopy. A singlet oxygen-reactive fluorescent indicator was employed to demonstrate that the production of this reactive species is also greatly reduced. This photoprotective effect was improved by encapsulation of the dyes in phospholipid-PEG micelles, which reduces the distance between them, thus enhancing the ET efficiency. The micelles were characterized for their optical properties and their size was determined to be about 10 nm with dynamic light scattering (DLS) techniques. The ET particles displayed greater fluorescence over 1000 nm compared to either dye encapsulated alone. The micelles proved to be superior than the free dye in terms of chemical, thermal and photo-stability. Moreover, the system demonstrated improved heating due to a greater photothermal effect compared to ICG dye in free or encapsulated form.