In recent years, there has been a growing interest in developing highly efficient photocatalysts with a visible light active semiconductor as one of its components. Herein, visible-light-driven photocatalytic activity of Gd-TiO2-GO nanocomposites were fabricated by sol-gel method. The photocatalytic property was evaluated for photodegradation of indigo carmine (IC) dye. The structural properties of the fabricated samples were characterised using SEM, XRD, PL, TEM, Raman, BET, EDS, elemental mapping and XPS analysis. To provide further insights into the synergistic effect, a hybrid density functional theory calculation was used to study the charge transfer, electronic and structural properties of Gd TiO2-GO nanocomposite. The as-fabricated nanocomposites showed improved visible light photocatalytic performance and degradation efficiency over pure TiO2. The optimal Gd content was found to be 0.6 wt%, and the apparent pseudo-fast order photodegradation rate of IC dye was 14.19-fold higher than that of pure TiO2 nanoparticles under visible light irradiation. Moreover, hydroxide radicals and holes were the main active species, and the hybrid nanocomposites exhibited high stability and recyclability during the IC dye degradation process. Herein, both GO sheets and Gd3+ ion were excellent co-catalysts and their presence promote the reaction sites and synergistically enhanced the photocatalytic degradation of IC dye. Also, the smaller effective mass caused a high separation of photogenerated charge carriers, thereby promoting the photodegradation efficiency. This work offers a new understanding of designing high-performance TiO2-based photocatalysts for wastewater treatment.