A method has been developed for highly sensitive detection of specific DNA sequences in a homogeneous assay using labeled oligonucleotide molecules in combination with single-molecule photon burst counting and identification. The fluorescently labeled oligonucleotides are called smart probes because they report the presence of complementary target sequences by a strong increase in fluorescence intensity. The smart probes consist of a fluorescent dye attached at the terminus of a hairpin oligonucleotide. The presented technique takes advantage of the fact that the used oxazine dye JA242 is efficiently quenched by complementary guanosine residues. Upon specific hybridization to the target DNA, the smart probe undergoes a conformational change that forces the fluorescent dye and the guanosine residues apart, thereby increasing the fluorescence intensity about six fold in ensemble measurements. To increase the detection sensitivity below the nanomolar range, a confocal fluorescence microscope was used to observe the fluorescence bursts from individual smart probes in the presence and absence of target DNA as they passed through the focused laser beam. Smart probes were excited by a pulsed diode laser emitting at 635 nm with a repetition rate of 64 MHz. Each fluorescence burst was identified by three independent parameters: (a) the burst size, (b) the burst duration, and (c) the fluorescence lifetime. Through the use of this multiparameter analysis, higher discrimination accuracies between smart probes and hybridized probe-target duplexes were achieved. The presented multiparameter detection technique permits the identification of picomolar target DNA concentrations in a homogeneous assay, i.e., the detection of specific DNA sequences in a 200-fold excess of labeled probe molecules.