As the only genetically encodable bioluminescent system among eukaryotes to date, bioluminescent fungi can unceasingly emit green light for days. Cross-reactions among four lineages of luminescent fungi suggest that all of them share a common bioluminescent mechanism. A series of excellent experiments by Yampolsky's group have revealed the key components in fungal bioluminescence (BL) from luciferin to light emission. However, the detailed underlying mechanism and processes remain unknown. By performing multireference and (time dependent) density functional theory calculations, we clearly described the bioluminescent process at the molecular and electronic state level. The fungal BL is initiated by the cycloaddition of O to luciferin to form an α-pyrone endoperoxide high-energy intermediate (). This oxygenation is not initiated by a single-electron transfer as it is in firefly BL, but it is explained by a charge transfer followed by a spin inversion mechanism. The thermolysis of generates oxyluciferin at the first singlet excited state (S) through a zwitterion intermediate (). A chemical form of the S-state oxyluciferin, -*, has the potential to be a light emitter. The current theoretical calculation provides great detail for deeply understanding the chemical processes in fungal BL and in chemiluminescence involving α-pyrone endoperoxide.