AbstractSolar‐induced chlorophyll fluorescence (SIF) is a remotely sensed optical signal emitted during the light reactions of photosynthesis. The past two decades have witnessed an explosion in availability of SIF data at increasingly higher spatial and temporal resolutions, sparking applications in diverse research sectors (e.g., ecology, agriculture, hydrology, climate, and socioeconomics). These applications must deal with complexities caused by tremendous variations in scale and the impacts of interacting and superimposing plant physiology and three‐dimensional vegetation structure on the emission and scattering of SIF. At present, these complexities have not been overcome. To advance future research, the two companion reviews aim to (1) develop an analytical framework for inferring terrestrial vegetation structures and function that are tied to SIF emission, (2) synthesize progress and identify challenges in SIF research via the lens of multi‐sector applications, and (3) map out actionable solutions to tackle these challenges and offer our vision for research priorities over the next 5–10 years based on the proposed analytical framework. This paper is the first of the two companion reviews, and theory oriented. It introduces a theoretically rigorous yet practically applicable analytical framework. Guided by this framework, we offer theoretical perspectives on three overarching questions: (1) The forward (mechanism) question—How are the dynamics of SIF affected by terrestrial ecosystem structure and function? (2) The inference question: What aspects of terrestrial ecosystem structure, function, and service can be reliably inferred from remotely sensed SIF and how? (3) The innovation question: What innovations are needed to realize the full potential of SIF remote sensing for real‐world applications under climate change? The analytical framework elucidates that process complexity must be appreciated in inferring ecosystem structure and function from the observed SIF; this framework can serve as a diagnosis and inference tool for versatile applications across diverse spatial and temporal scales.