The excited state dynamics of the dye molecule auramine O have been measured in nanoscale size water droplets stabilized by ionic surfactants using ultrafast fluorescence up-conversion. Specifically, the reaction dynamics have been measured as a function of the size of the water droplet in the range 1–10 nm and as a function of the counterion charge. The data are analysed quantitatively using a generalized Smoluchowski equation. The rate of the reaction in the reverse micelle is dramatically decreased compared to the bulk water environment. It increases as nanodroplet size increases, but never attains the bulk value. The data are not well described by a ‘core-shell’ model, i.e. by assuming a slow reaction in the interface (shell) and a bulk-like decay in the core. The effect of changing the counterion is small, with three different singly charged counterions showing essentially identical reaction dynamics, while the double charged Ca²⁺ counterion only slightly slows the reaction. This insensitivity to counterion is in contrast to the observations of solvation dynamics experiments and molecular dynamics simulation. The origins of these differences are discussed in terms of the solute reaction coordinate being more sensitive to different motions of the confined aqueous solvent than solvation dynamics and to more delocalised properties of the dispersed phase than are detected in simulations.