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Localized molecular orbitals are often used for the analysis of chemical bonds, but they can also serve to efficiently and comprehensibly compute linear response properties. While conventional canonical molecular orbitals provide an adequate basis for the treatment of excited states, a chemically meaningful identification of the different excited-state processes is difficult within such a delocalized orbital basis. In this work, starting from an initial set of supermolecular canonical molecular orbitals, we provide a simple one-step top-down embedding procedure for generating a set of orbitals, which are localized in terms of the supermolecule but delocalized over each subsystem composing the supermolecule. Using an orbital partitioning scheme based on such sets of localized orbitals, we further present a procedure for the construction of local excitations and charge-transfer states within the linear response framework of time-dependent density functional theory (TDDFT). This procedure provides direct access to approximate diabatic excitation energies and, under the Tamm–Dancoff approximation, also their corresponding electronic couplings—quantities that are of primary importance in modeling energy transfer processes in complex biological systems. Our approach is compared with a recently developed diabatization procedure based on subsystem TDDFT using projection operators, which leads to a similar set of working equations. Although both of these methods differ in the general localization strategies adopted and the type of basis functions (Slaters vs Gaussians) employed, an overall decent agreement is obtained. [ABSTRACT FROM AUTHOR]