Photoplethysmography (PPG) is a widely emerging method to assess vascular health in humans. The origins of the signal of reflective PPG on peripheral arteries have not been thoroughly investigated. We aimed to identify and quantify the optical and biomechanical processes that influence the reflective PPG signal. We developed a theoretical model to describe the dependence of reflected light on the pressure, flow rate, and the hemorheological properties of erythrocytes. To verify the theory, we designed a silicone model of a human radial artery, inserted it in a mock circulatory circuit filled with porcine blood, and imposed static and pulsatile flow conditions. We found a positive, linear relationship between the pressure and the PPG and a negative, non-linear relationship, of comparable magnitude, between the flow and the PPG. Additionally, we quantified the effects of the erythrocyte disorientation and aggregation. The theoretical model based on pressure and flow rate yielded more accurate predictions, compared to the model using pressure alone. Our results indicate that the PPG waveform is not a suitable surrogate for intraluminal pressure and that flow rate significantly affects PPG. Further validation of the proposed methodology in vivo could enable the non-invasive estimation of arterial pressure from PPG and increase the accuracy of health-monitoring devices.