Used as a chromogenic substrate for detecting esterase activity in histochemical, cytochemical, and microbiological assays. Hydrolysis by esterases releases indoxyl, which spontaneously oxidizes in air to form indigo dye, producing a visible blue precipitate or color change. This is valuable for enzyme localization in tissues, cell identification, and bacterial differentiation in diagnostics. Also serves as an intermediate in the production of indigo dye for textile and dyeing industries, such as coloring denim.