  Using the empirical relations between the central galaxy luminosity and the
halo mass, and between the total galaxy luminosity in a halo and the halo mass,
we construct the galaxy luminosity function (LF). To the luminosity of the
central galaxy in a halo of a given mass we assign log-normal scatter with a
mean calibrated against the observations. In halos where the total galaxy
luminosity exceeds that of the central galaxy, satellite galaxies are
distributed as a power-law in luminosity. Combined with the halo mass function,
this description reproduces the observed characteristics of the galaxy LF,
including a shape consistent with the Schechter function. When all galaxies are
included, regardless of the environment or the Hubble type, the Schechter L* is
the luminosity scale above which the central galaxy luminosity-halo mass
relation flattens; L* corresponds to ~10^{13}Msun on the halo mass scale. In
surveys where central galaxies in massive clusters are neglected, either by
design or because of the cosmic variance, L* is simply the mean luminosity of
central galaxies in halos at the upper end of the selected mass range. The
smooth, exponential decay of the Schechter function toward high luminosities
reflects the intrinsic scatter in the central galaxy luminosity-halo mass
relation. In addition to the LF, the model successfully reproduces the observed
dependence of galaxy clustering bias on luminosity.
