Perfluoro-3-methyl-2-butanone (CF3C(O)CF(CF3)(2), abbreviated as C5) is a potentially excellent fire suppression alternative to halons and a promising dielectric gas for SF6 replacement. As a prototypical perfluorinated asymmetrical ketone, photodissociation and reaction with hydroxyl radicals of C5 have been investigated theoretically to gain insights into its atmospheric chemistry and environmental impact. C5 has a broad UV absorption band in the range 260-360 nm with a maximum at 302 nm and the maximal photolysis rate coefficient is 8.3 x 10(-5) s(-1). Photoexcitation from S-0 through the perpendicular n -> pi* transition produces the excited S-1 species, which can either dissociate straightforwardly via the bifurcated alpha-CC bond cleavage or be trickled down to T-1 via the S-1/T-1 intersystem crossing (ISC) pathway. In the Franck-Condon region of the S-1 surface, the long-lived S-1 species exists and the slow ISC pathway is dominant, followed by the alpha-cleavage through T-1 barriers to form perfluoroalkyl and perfluoroacetyl radicals. While the excitation energy exceeds 286 nm, the direct dissociation of C5 though the S-1 barriers takes over before the ISC occurs. Several pathways for regeneration of the ground-state S-0 from S-1 and T-1 via seams of crossing or internal conversion were revealed. The C5 + OH reaction occurs via direct carbonyl addition mechanism followed by the rapid displacement of one of the alkyl groups. Although it can be accelerated considerably by the H2O-mediated catalysis or the intercepted vibrationally excited quantum states in the hot S-0*, the degradation of C5 by OH radicals is too slow to compete with the photolysis pathways.