Objective: Pure TiO2 and Fe3+-TiO2 nanoparticles have been prepared by a simple hydrothermal method with different Fe3+ concentrations.Method: The synthesized nanoparticles are analysed to determine its structural, optical, morphological and compositional properties using X-ray diffraction, Raman, UV-DRS, photoluminescence, Mossbauer, XPS, TEM and SEM/EDS. The EDS micrograph confirms the existence of Fe3+ atoms in the TiO2 matrix with 0.85, 1.52 and 1.87 weight percent. The crystallite size and band gap decrease with increasing Fe3+concentration. The average particle size obtained from TEM is 7-11 nm, in good agreement with XRD results. Raman bands at 640 cm-1, 517 cm-1 and 398 cm-1 further confirm pure phase anatase in all samples. XPS results show the proper substitutions of a few sites of Ti4+ ions by Fe3+ ions in the TiO2 host lattice. Conclusion: The intensity of PL spectra for Fe3+-TiO2shows a gradual decrease in the peak intensity with increasing Fe3+concentration in TiO2, and it indicates a lower recombination rate as the Fe3+ ion concentration increases. These nanoparticles are further studied for its photocatalytic activities using malachite green dye under UV, visible and sunlight.