Vacuum ultraviolet laser photodissociation (UVPD) of peptide ions leads to unusual dissociation channels involving backbone C-C bond breaking. However, the molecular basis for the observed behavior is not clearly understood. We now report theoretical investigations using ab initio/density functional theory (DFT) techniques on neutral and protonated dipeptides undergoing vacuum ultraviolet (VUV) induced fragmentation via a Rydberg excitation (and/or electron detachment) and subsequent C-C bond cleavage. New experimental results on VUV photodissociation of dipeptides (protonated Ala_Arg and Arg_Ala) provide strong support for our proposed model. Our mechanism also provides a natural explanation for the presence of immonium ions that are sometimes observed in such experiments.