Fluorescence correlation spectroscopy (FCS) has become an important tool for measuring diffusion, concentration, and molecular interactions of cellular components. The interpretation of FCS data critically depends on the measurement set-up. Here, we present a rigorous theory of FCS based on exact wave-optical calculations. Six of the most important optical and photophysical factors that influence FCS are studied: fluorescence anisotropy, cover-slide thickness, refractive index of the sample, laser-beam geometry, optical saturation, and pinhole adjustment. Our theoretical framework represents a general attempt to link all relevant parameters of the experimental set-up with the measured correlation function.