We present a microscopic mechanism of optical nonlinearity in quasi-one-dimensional semiconductors within the context of rigid band Peierls-extended Hubbard models. A detailed configuration space analysis is done to predict the dominant excitation paths. We show that only two channels contribute to the bulk of the optical nonlinearity, even though an infinite number of channels are possible in prinicple. Most importantly, these channels involve a virtual two photon excited state whose relative energy should be nearly parameter independent in the infinite chain limit. This would imply that the mechanism of optical nonlinearity, as well as the frequency dependence of the third order optical susceptibility, are also largely parameter independent. This universality is a consequence of the one dimensionality alone and remains valid for arbitrary convex Coulomb interactions. These conjectures are confirmed by exact numerical calculations on finite chains that do very careful analysis of finite size effects.