Decomposition of the energetic material FOX-7 (1,1-diamino-2,2-dinitroethylene, C2H4N4O4) is investigated both theoretically and experimentally. The NO molecule is observed as an initial decomposition product subsequent to electronic excitation. The observed NO product is rotationally cold (<35 K) and vibrationally hot (2800 K). The initial decomposition mechanism is explored at the complete active space self-consistent field (CASSCF) level. Potential energy surface calculations at the CASSCF(12,8)/6-31G(d) level illustrate that conical intersections play an essential role in the decomposition mechanism. Electronically excited S2 FOX-7 can radiationlessly relax to lower electronic states through (S2/S1)CI and (S1/S0)CI conical intersections and undergo a nitro-nitrite isomerization to generate NO product on the S0 state. The theoretically predicted mechanism is consistent with the experimental results. As FOX-7 decomposes on the ground electronic state, thus, the vibrational energy of the NO product from FOX-7 is high. The observed rotational energy distribution for NO is consistent with the final transition state structure on the S0 state. Ground state FOX-7 decomposition agrees with previous work: the nitro-nitrite isomerization has the lowest average energy barrier, the C-NH2 bond cleavage is unlikely under the given excitation conditions, and HONO formation on the ground state surface is energy accessible but not the main process.