This Thesis describes the systematic theoretical study aimed at prediction of the essential properties for the functional organic molecules that belong to diarylethene (DA) family of compounds. Diarylethenes present the distinct ability to change color under the influence of light, known as photochromism. This change is due to ultrafast chemical transition from open to closed ring isomers (photocyclization). It can be used for optical data storage, photoswitching, and other photonic applications. In this work we apply Density Functional Theory methods to predict 6 of the related properties: (i) molecular geometry; (ii) resonant wavelength; (iii) thermal stability; (iv) fatigue resistance; (v) quantum yield and (vi) nanoscale organization of the material. In order to study sensitivity at diode laser wavelengths, we optimized geometry and calculated vertical absorption spectra for a benchmark set of 28 diarylethenes. Bond length alternation (BLA) parameters and maximum absorption wavelengths (λmax) are compared to the data presently available from X-ray diffraction and spectroscopy experiments. We conclude that TD-M05/6-31G*/PCM//M05-2X/6-31G*/PCM level of theory gives the best agreement for both the parameters. For our predictions the root mean square deviation (RMSD) are below 0.014 Å for the BLAs and 25 nm for λmax. The polarization functions in the basis set and solvent effects are both important for this agreement. Next we consider thermal stability. Our results suggest that UB3LYP and UM05-2X functionals predict the activation barrier for the cycloreversion reaction within 3-4 kcal/mol from experimental value for a set of 7 photochromic compounds. We also study thermal fatigue, defined as the rate of undesirable photochemical side reactions. In order to predict the kinetics of photochemical fatigue, we investigate the mechanism of by-product formation. It has been established experimentally that the by-product is formed from the closed isomer; however the mechanism was not known. We found that the thermal by-product pathway involves the bicyclohexane (BCH) ring formation as a stable intermediate, while the photochemical by-product formation pathway may involve the methylcyclopentene diradical (MCPD) intermediate. At UM05-2X/6-31G* level, the calculated barrier between the closed form and the BCH intermediate is 51.2 kcal/mol and the barrier between the BCH intermediate and the by-product 16.2 kcal/mol. Next we investigate two theoretical approaches to the prediction of quantum yield (QY) for a set of 14 diarylethene derivatives at the validated M05-2X/6-31G* theory level. These include population of ground-state conformers and location of the pericycylic minimum on the potential energy surface 2-A state. Finally, we investigate the possibility of nanoscale organization of the photochromic material based on DNA template, as an alternative to the amorphous polymer matrix. Here we demonstrate that Molecular Dynamic methods are capable to describe the intercalation of π-conjugated systems between DNA base pairs and accurately reproduced the available photophysical properties of these nanocomposites. In summary, our results are in good agreement with the experimental data for the benchmark set of molecules we conclude that Density Functional Theory methods could be successfully used as an important component of material design strategy in prediction of accurate molecular geometry, absorption spectra, thermal stability of isomers, fatigue resistance, quantum yield of photocyclization and photophysical properties of nanocomposites.