The potential energy profiles toward formation of cyclobutane pyrimidine dimers CPD and the physical quenching after UV excitation were explored for the dinucleotide thymine dinucleoside monophosphate (TpT) using density functional theory (ωB97XD) and the time-dependent density functional theory (TD-ωB97XD). The ωB97XD functional that includes empirical dispersion correction is shown to be an appropriate method to obtain rational results for the current large reaction system of TpT. Photophysical quenching is shown to be predominant over the photochemical CPD formation. Following the initial excitation to the (1)ππ* state, the underlying dark (1)nπ* state bifurcates the excited population to the prevailing IC to S0 and the small ISC to the long-lived triplet state T1 via T4 ((3)ππ*) state that has negligible energy gap with (1)nπ* state. Even for the reactive T1 state, two physical quenching pathways resulting in the conversion back to ground-state reactant via the T1/S0 crossing points are newly located, which are in strong competition with CPD formation. These results provide rationale for the recently observed nanosecond triplet decay rates in the single-stranded (dT)18 and inefficiency of deleterious CPD formation, which allow for a deeper understanding of DNA photostability.