Indoor photovoltaics (IPVs) have recently attracted considerable attention due to their ability to harvest indoor light to power Internet of Things (IoT) devices. However, in contrast to the well-established device physics of solar cells, research on IPV device physics remains limited, hindering the development of this emerging field. Here, we apply the Shockley–Queisser (SQ) theory to systematically investigate the device physics of IPVs. Through the comparative analysis of spectral differences between standard sunlight and indoor light sources, we calculate the SQ-limited short-circuit current density (Jsc), open-circuit voltage (Voc), and fill factor (FF) as functions of the absorber material's bandgap. We reveal that Jsc exhibits a linear dependence on illuminance; Voc remains nearly constant across varying illumination levels; and FF necessitates a large shunt resistance to retain high values. Based on these PV parameters, we finally calculated the SQ-limited power conversion efficiency (PCE), demonstrating an optimal bandgap range of 1.8–1.9 eV for IPVs, which achieves a PCE limit of approximately 55%.