Herein we have employed high-level multi-reference CASSCF and MS-CASPT2 electronic structure methods to systematically study the photochemical mechanism of intramolecularly hydrogen-bonded 2-(2'-hydroxyphenyl)-4-methyloxazole. At the CASSCF level, we have optimized minima, conical intersections, minimum-energy reaction paths relevant to the excited-state intramolecular proton transfer (ESIPT), rotation, photoisomerization, and the excited-state deactivation pathways. The energies of all structures and paths are refined by the MS-CASPT2 method. On the basis of the present results, we found that the ESIPT process in a conformer with the OH... N hydrogen bond is essentially barrierless process; whereas, the ESIPT process is inhibited in the other conformer with the OH... O hydrogen bond. The central single-bond rotation of the S1 enol species is energetically unfavorable due to a large barrier. In addition, the excited-state deactivation of the S1 keto species, as a result of the ultrafast ESIPT, is very efficient because of the existence of two easily-approached keto S1/S0 conical intersections. In stark contrast to the S1 keto species, the decay of the S1 enol species is almostly blocked. The present theoretical study contributes valuable knowledge to the understanding of photochemistry of similar intramolecularly hydrogen-bonded molecular and biological systems.