Andrew Parker and Helen White-Cooper hope to create the next big thing in optical engineering with the help of £100,000 from the Engineering and Physical Sciences Research Council.
The Oxford University team wants to exploit some of the ways nature has evolved to handle light.
It hopes to harvest cells from Morpho butterfly chrysalises that develop into iridescent wing scales. The results could potentially improve anti-counterfeiting technology, make microchips used in optical fibres smaller or even give automobile paints an iridescent sheen.
Dr White-Cooper said the first step would be to remove cells that make wing structures before they have begun to develop, then to grow them in culture and persuade them to mature as they would have done normally.
The team will then try to split the developing wings into individual cells.
"Hopefully we can take a cell from a caterpillar and make it divide, rather than make just one butterfly wing's worth of cells. You can get ten times that amount from one caterpillar."
The ultimate aim of the work is to propagate the cells indefinitely and dispense with the caterpillars.
Dr Parker, who applied for the grant, said the project had great potential.
The optics industry would be interested in the scales themselves and in the technique of farming them, he said.
"The project will create a factory of cells making butterfly scales. We can farm off the scales and use them directly."
The team is looking for a cell culture specialist "who's up for the technical challenge" to help with the project. The deadline is August 22.