The photochemistry of the anticancer drug flutamide (FM), 2-methyl-N-[4-nitro-3-(trifluoromethyl)phenyl]propan-amide, in homogeneous media and in the β-cyclodextrin (β-CD) cavity has been investigated. The photoreactivity of the free molecule has been rationalized on the basis of an intramolecular nitro to nitrite rearrangement followed by cleavage of the nitrite intermediate. The twisted geometry of the nitro group with respect to the aromatic plane plays a key role in triggering such a photoprocess. Incorporation of FM in the β-CD cavity leads to dramatic effects on both the efficiency and the nature of the photochemical deactivation pathways of the guest molecule. A 20-fold increase in the FM photodecomposition quantum yield and the formation of photoproducts originated by both reduction of the nitro group and cleavage of the amide bond were observed in the presence of the macrocycle. Such a behavior cannot be attributed exclusively to the micropolarity of β-CD and/or to its role as a reactant. The induced circular dichroism spectra and the nature of the photoproducts formed in these experimental conditions provide indications that the photoreactivity in the β-CD microenvironment could likely be mediated by structural changes of FM upon complexation.