In the present work, we have studied ion-pair states of matrix-isolated I2 with vacuum-UV absorption and UV-vis-NIR emission, where the matrix environment is systematically changed by mixing Kr with Xe, from pure Kr to a more polarizable Xe host. Particular emphasis is put on low doping levels of Xe that yield a binary complex I2–Xe, as verified by coherent anti-Stokes Raman scattering (CARS) measurements. Associated with interaction of I2 with Xe we can observe strong new absorption in vacuum-UV, redshifted 2400 cm−1 from the X → D transition of I2. Observed redshift can be explained by symmetry breaking of ion-pair states within the I2–Xe complex. Systematic Xe doping of Kr matrices shows that at low doping levels, positions of I2 ion-pair emissions are not significantly affected by complexation with Xe, but simultaneous increase of emissions from doubly spin-excited states indicates non-radiative relaxation to valence states. At intermediate doping levels ion-pair emissions shift systematically to red due to change in the average polarizability of the environment. We have conducted spectrally resolved ultrafast pump-probe ion-pair emission studies with pure and Xe doped Kr matrices, in order to reveal the influence of Xe to I2 dynamics in solid Kr. Strikingly, relaxed emission from the ion-pair states shows no indication of complex presence. It further indicates that the complex escapes detection due to a non-radiative relaxation.