A naphthalimide-based fluorophore (HONIOH) was designed by introducing a hydroxy unit into the 4th position of the aromatic core and a hydroxypropyl unit into the N-imide site. Photophysical properties of HONIOH were highly dependent on solvents, which was ascribed to the excited state proton transfer (ESPT) coupled with intramolecular charge transfer (ICT) mechanism. Further studies demonstrated that HONIOH can be used to recognize N, N-dimethylformamide (DMF) qualitatively and differentiate methanol from ethanol. Three control compounds were synthesized, their photophysical properties were investigated in various solvents, and experimental results revealed that hydroxyl and hydroxypropyl units contribute to the solvents differentiation ability of HONIOH. In addition, HONIOH was successfully applied as a colorimetric, fluorescent probe for the discriminative detection of trace water in organic solvents, such as fluorescence turn-on response accompanied by fluorescent color changes from light yellow to purple in DMF, and fluorescence turn-off response and blue to yellow fluorescent color changes in acetonitrile, tetrahydrofuran, and acetone. We believe that N-substituted 4-hydroxynaphthalimide derivatives may find widespread applications in chemical and biochemical sensing and imaging.