Chaetopterus variopedatus has been studied for over a century in terms of its physiology, ecology and life history. One focus of research is on its intrinsic bioluminescent emissions, which can be observed as a blue light emitted from the extremities of individual body segments, or as a secreted mucus. Even though research shows that C. variopedatus is a species complex miscategorised as a single species, all of the variants of this polychaete produce light, which has been investigated in terms of both physiology and biochemistry. Despite decades of study there are still many questions about the luminescence reaction, and as of yet, no clear function for light emission exists. This review summarises the current knowledge on C. variopedatus luminescence in addition to briefly describing its morphology, life cycle and ecology. Possible functions for luminescence were discussed using observations of specimens found in Brazil, along with a comparison of previous studies of other luminescent organisms. Further study will provide a better understanding of how and why C. variopedatus produces luminescence, and purifying the protein and luciferin involved could lead to new bioanalytical applications, as this reaction is unique amongst all known luminescent systems.