The side population (SP) assay, a technique used in cancer and stem cell research, assesses the activity of ABC transporters on Hoechst staining in the presence and absence of transporter inhibition, identifying SP and non-SP cell (NSP) subpopulations by differential staining intensity. The interpretation of the assay is complicated because the transporter-mediated mechanisms fail to account for cell-to-cell variability within a population or adequately control the direct role of transporter activity on staining intensity. We hypothesized that differences in dye kinetics at the single-cell level, such as ABCG2 transporter-mediated efflux and DNA binding, are responsible for the differential cell staining that demarcates SP/NSP identity. We report changes in A549 phenotype during time in culture and with TGFxcexb2 treatment that correlate with SP size. Clonal expansion of individually sorted cells re-established both SP and NSPs, indicating that SP membership is dynamic. To assess the validity of a purely kinetics-based interpretation of SP/NSP identity, we developed a computational approach that simulated cell staining within a heterogeneous cell population, this exercise allowed for the direct inference of the role of transporter activity and inhibition on cell staining. Our simulated SP assay yielded appropriate SP responses for kinetic scenarios in which high transporter activity existed in a portion of the cells and little differential staining occurred in the majority of the population. With our approach for single-cell analysis, we observed SP and NSP cells at both ends of a transporter activity continuum, demonstrating that features of transporter activity as well as DNA content are determinants of SP/NSP identity.