It is well known that certain classes of dye are reducible to stable colorless leuco compounds, which can be oxidized in air back to the colored species. We now reported that bis(4-dialkylaminophenyl)squaraine dyes are readily reduced in solution by borohydride to give alkali soluble leuco compound, which exists in the 3-hydroxy 2,4-bis(4-dialkylaminophenyl)cyclobuten-one. New alkylamine leuco compounds were synthesized by the reaction of leuco chloro-squaraine with alkylamine derivatives. The leuco compounds are easily isolated and can be air oxidized back to the squaraine dyes. These dyes have many technical application. e.g. in xerography, solar cell, optical recording material, redox indicators, and enzyme assays.