In the fungal bioluminescence pathway, caffeylpyruvate (fungal oxyluciferin) is recycled to caffeic and pyruvic acids through hydrolysis. The reaction is thought to be catalysed by a putative caffeylpyruvate hydrolase, possibly encoded by the cph gene, a member of the biosynthetic gene cluster encoding bioluminescence. Here, we experimentally confirmed the role of CPH as caffeylpyruvate hydrolase in vitro and in vivo. We show that oxyluciferin is an inhibitor of the bioluminescence reaction and that CPH orthologues from various bioluminescent fungi differ in their ability to hydrolyse oxyluciferin. This suggests a possible role of caffeylpyruvate hydrolases in bioluminescent fungi and highlights CPH as a target for directed evolution to develop autoluminescent reporter tools.