The photophysics of roseoflavin in three different environments is investigated by using ab initio and quantum mechanics/molecular mechanics methods. Intramolecular charge transfer is shown to be responsible for the quenching of the fluorescence in the gas phase, and in the water environment. However, for the roseoflavin incorporated into the blue light using flavin (BLUF) protein environment (substituting the native flavin) no such deactivation is found. The conical intersection between the locally excited state of the chromophore and the charge transfer state involving the tyrosine residue, which in the native BLUF domain is responsible for initiating the photocycle, is missing for the roseoflavin substituted protein. This explains the experimental observations of the lack of any photocycle, and the loss of the biological function of the BLUF photoreceptor reported earlier.