In this study, a well-defined organic capsule assembled from two octa acid (OA) molecules acting as host and select arylazoisoxazoles (AAIO) acting as guests were employed to demonstrate that confined molecules have restricted freedom that translates into reaction selectivity in both ground and excited states. The behavior of these AAIO guests in confined capsules was found to be different from that found in both crystals, where there is very little freedom, and in isotropic solvents, where there is complete freedom. Through one-dimensional (1D) and two-dimensional (2D) 1H NMR spectroscopic experiments, we have established a relationship between structure, dynamics and reactivity of molecules confined in an OA capsule. Introduction of CF3 and CH3 substitution at the 4-position of the aryl group of AAIO reveals that in addition to space confinement, weak interactions between the guest and the OA capsule control the dynamics and reactivity of guest molecules. 1H NMR studies revealed that there is a temperature-dependence to guest molecules tumbling (180° rotation along the capsular short axis) within an OA capsule. While 1H NMR points to the occurrence of tumbling motion, MD simulations and simulation of the temperature-dependent NMR signals provide an insight into the mechanism of tumbling within OA capsules. Thermal and photochemical isomerization of AAIO were found to occur within an OA capsule just as in organic solvents. The observed selectivity noted during thermal and photo induced isomerization of OA encapsulated AAIOs can be qualitatively understood in terms of the well-known concepts due to Bell-Evans-Polanyi (BEP principle), Hammond and Zimmerman.