Jack-o-lantern fungus is seen here in daylight although its splendour really grows after sunset. The gills on the underside of these orange fruiting bodies glow an eerie green in the dark!
Through metabolic and physiological functions, all living things must produce and ultimately dispose of waste. This fungus exudes its waste through its gills, and some of these wastes are luciferases. Luciferases are enzymes / secondary metabolites commonly used for bioluminescence (or emission of light by a living organism) such as in fireflies (Photinus pyralis). There are five commonly accepted reasons for bioluminescence: camouflage, attraction, repulsion, communication, and illumination (mostly in underwater creatures). As for why bioluminescence occurs in Omphalotus, I haven’t been able to track down a reference. However, for more on the particulars of this species, see Omphalotus olearius on Tom Volk’s website.
Daniel adds the remainder of this entry: I notice Tom Volk also refers to the compound illudin S that is present in members of the genus Omphalotus. Of illudin S, Tom notes: “[it] has been found to be active against a whole mess of different cancer cells in vitro. Unfortunately illudin S is somewhat too toxic for clinical use. Synthetic analogs have been prepared recently that are less toxic, and yet active.” One of these synthetic analogues is Irofulven. An early paper on this chemical: MacDonald JR, et al. 1997. Preclinical antitumor activity of 6-hydroxymethylacylfulvene, a semisynthetic derivative of the mushroom toxin illudin S. Cancer Research 57 (2): 279-83.
Oh, and before any asks: no, it’s not edible. It looks somewhat look a chanterelle, but it’ll make you regret ingesting it (as Tom Volk declares: “Omphalotus olearius won’t kill you — it will just make you wish you were dead”).