A dynamical theory for modeling the dipole-dipole interaction in a microcavity is formulated using the Green dyadic approach. To our knowledge, this theory is one of the most general in many aspects of modeling the phenomenon. It accommodates an arbitrary number of layers adjacent to the cavity, constant but arbitrary dielectric properties within each layer, inclusion of retardation effects, arbitrary dipole orientations, and an unlimited number of interacting dipoles. Numerical results for the emission properties of interacting molecular dipoles in a microcavity are presented to illustrate the capability of the method.