Calcein AM enters live cells passively due to its non-polar properties. Once inside, the cellular esterases hydrolyze the acetoxymethyl ester groups, converting Calcein AM into the polar fluorescent compound, Calcein. This conversion traps the dye inside the cells, allowing researchers to measure cell viability based on fluorescence intensity. Dead cells, which lack esterase activity, cannot convert Calcein AM and thus remain non-fluorescent.