Concentration dependent interaction between negatively charged citrate capped gold nanoparticles (GNP) and cationic Rhodamine 6G dye was studied from the change in localized surface plasmon resonance (LSPR) absorption due to dye induced nanoparticles aggregation, fluorescence quenching and surface enhanced Raman scattering (SERS) of the dye. The optical properties resulting from their interaction were found to be highly dependent on dilution of the GNP and concentration of the dye. Composites of up to 1μM dye concentration, relatively low for monolayer coverage on nanoparticles surface, did not result any noticeable change in LSPR wavelength and bandwidth with respect to the pure GNP solution whereas significantly high quenching of the dye fluorescence was observed. In contrast the composites with higher dye concentration were found to exhibit an additional inter-particle coupled LSPR excitation band at higher wavelengths and the characteristics of this absorption band were found to be highly influenced by the dilution of the GNP. The fluorescence quenching efficiency was found to decrease with either increasing the dye concentration or diluting the GNP. Stern–Volmer plots were found to be non-linear at low dye concentrations and almost linear at higher concentrations. The observed fluorescence quenching was attributed to the resonance energy transfer process substantiated by significant change in the excited state lifetime of the dye in the presence of the GNP. Also dye interacting nanoparticles clusters formed on a substrate via solvent evaporation were found to be highly effective for the SERS based detection of very low concentrations of the dye.