Levoglucosenone (LGO) is the major product formed when cellulose is pyrolyzed in the presence of acid at temperatures between 170 and 350 °C. The current intense interest in biomass conversion has led to a number of reports on its preparation; however, there is still uncertainty on the mechanism leading to LGO. We propose a new mechanism which involves a C2-C1 hydride shift followed by intramolecular trapping of a dioxyallyl cation. The reaction has been modeled using DFT calculations from the known LGO precursors levoglucosan and 1,4:3,6-dianhydro-α-D-glucopyranose to a common intermediate with calculated barriers of 10.6 and 13.5 kcal·mol-1, respectively. A discussion of the literature on the formation of LGO from late pathway intermediates is also provided.