Hyperspectral imaging and analysis approaches offer accurate detection and quantification of fluorescently-labeled proteins and cells in highly autofluorescent tissues. However, selecting optimum acquisition settings for hyperspectral imaging is often a daunting task. In this study, we compared two hyperspectral systems—a widefield system with acoustic optical tunable filter (AOTF) and charge coupled device (CCD) camera, and a confocal system with diffraction gratings and photomultiplier tube (PMT) array. We measured the effects of system parameters on hyperspectral image quality and linear unmixing results. Parameters that were assessed for the confocal system included pinhole diameter, laser power, PMT gain and for the widefield system included arc lamp intensity, and camera gain. The signal-to-noise ratio (SNR) and the root-mean-square error (RMS error) were measured to assess system performance. Photobleaching dynamics were studied. Finally, theoretical sensitivity studies were performed to estimate the incremental response (sensitivity) and false-positive detection rates (specificity). Results indicate that hyperspectral imaging assays are highly dependent on system parameters and experimental conditions. For detection of green fluorescent protein (GFP)-expressing cells in fixed lung tissues, a confocal pinhole of five airy disk units, high excitation intensity and low detector gain were optimal. The theoretical sensitivity studies revealed that widefield hyperspectral microscopy was able to detect GFP with fewer false positive occurrences than confocal microscopy, even though confocal microscopy offered improved signal and noise characteristics. These studies provide a framework for optimization that can be applied to a variety of hyperspectral imaging systems.