Conventional TiO2-based photocatalysts oxidize NO to nitrate species, which do not spontaneously desorb and therefore deactivate the catalyst. We show that the selectivity of this reaction can be changed by creating a large concentration of oxygen vacancies in TiO2 nanoparticles through thermal reduction in a reducing atmosphere. This results in the photoreduction of nitric oxide (NO) to N-2 and O-2, species which spontaneously desorb at room temperature. The activity of the photoreduction reaction can be greatly enhanced by doping the TiO2 nanoparticles with Fe3+, an acceptor-type dopant that stabilizes the oxygen vacancies. Moreover, the photoinduced reduction of Fe3+ to Fe2+ provides a recombination pathway that almost completely suppresses the formation of NO2 and thus enhances the selectivity of the reaction for N-2 formation. Gas chromatography confirms that N-2 and O-2 are formed in a stoichiometric ratio, and the activity for NO decomposition is found to be limited by the concentration of oxygen vacancies. A series of internally consistent reaction equations are proposed that describe all experimentally observed features of the photocatalytic process. The observed influence of oxygen vacancies on the activity and selectivity of photoinduced reactions may lead to new routes toward the design of highly selective photocatalysts.