Physical Nature and Timing Variations of the Eclipsing System V407 Pegasi

New multiband CCD photometry is presented for V407 Peg; the $R_{\rm C}$ light curves are the first ever compiled. Our light curves, displaying a flat bottom at secondary minimum and an O'Connell effect, were simultaneously analyzed with the radial-velocity (RV) curves given by Rucinski et al. (2008). The light changes of the system are best modeled by using both a hot spot on the secondary star and a third light. The model represents historical light curves also. All available minimum epochs, including our six timing measurements, have been examined and indicate that the eclipse timing variation is mainly caused by light asymmetries due to the spot activity detected in the light-curve synthesis. The hot spot may be produced as a result of the impact of the gas stream from the primary star. Our light and velocity solutions indicate that V407 Peg is a totally-eclipsing A-type overcontact binary with values of $q$=0.251, $i$=87$^\circ.6$, $\Delta T$=496 K, $f$=61 $\%$, and $l_3$=11$\sim$16 $\%$. Individual masses and radii of both components are determined to be $M_1$=1.72 M$_\odot$, $M_2$=0.43 M$_\odot$, $R_1$=2.15 R$_\odot$, and $R_2$=1.21 R$_\odot$. These results are very different from previous ones, which is probably caused by the light curves with distorted and inclined eclipses used in those other analyses. The facts that there are no objects optically related with the system and that the seasonal RVs show a large discrepancy in systemic velocity indicate that the third light source most likely arises from a tertiary component orbiting the eclipsing pair.