We show that the excess in electron recoil events seen by the XENON1T experiment can be explained by relatively low-mass Luminous Dark Matter candidate. The dark matter scatters inelastically in the detector (or the surrounding rock), to produce a heavier dark state with a ~2.75 keV mass splitting. This heavier state then decays within the detector, producing a peak in the electron recoil spectrum which is a good fit to the observed excess. We comment on the ability of future direct detection datasets to differentiate this model from other Beyond the Standard Model scenarios, and from possible tritium backgrounds, including the use of diurnal modulation, multi-channel signals etc.,~as possible distinguishing features of this scenario.