Semiclassical electron-radiation-ion dynamics simulations are reported for the photodissociation of cyclobutane into two molecules of ethylene. The results clearly show the formation of the tetramethylene intermediate diradical, with dissociation completed in similar to 400 fs. In addition, the potential energy surfaces of the electronic ground state and lowest excited-state were calculated at the complete-active-space self-consistent-field/multireference second-order perturbation theory (CASSCF/MRPT2) level with 6-31G* basis sets, along the reaction path determined by the dynamics simulations. There are well-defined energy minima and maxima in the intermediate state region. It is found that both C-C-C bond bending and rotation of the molecule (around the central C-C bond) have important roles in determining the features of the potential energy surfaces for the intermediate species. Finally, the simulations and potential energy surface calculations are applied together in a discussion of the full mechanism for cyclobutane photodissociation.