  We present a correlated {\it ab initio} description of the paramagnetic phase
of Tl$_2$Mn$_2$O$_7$, employing a combined local density approximation (LDA)
with multiorbital dynamical mean field theory (DMFT) treatment. We show that
the insulating state observed in this colossal magnetoresistance (CMR)
pyrochlore is determined by strong Mn intra- and inter-orbital local
electron-electron interactions. Hybridization effects are reinforced by the
correlation-induced spectral weight transfer. Our result coincides with optical
conductivity measurements, whose low energy features are remarkably accounted
for by our theory. Based on this agreement, we study the disorder-driven
insulator-metal transition of doped compounds, showing the proximity of
Tl$_2$Mn$_2$O$_7$ to quantum phase transitions, in agreement with recent
measurements.
