With Gd2O3, Fe(NO3)3·9H2O, and nitric acid(1:1 volume fraction) as starting materials, nanocrystalline material of rare-earth composite oxide GdFeO3 with perovskite-type structure was synthesized by sol-gel method in the system of citric acid. Structural characteristics were characterized by XRD and TEM, which indicate that the sample is nanocrystallite with uniform grain size distribution and the average grain size is about 21 nm. Its crystal structure includes a certain amount of lattice distortion due to decrease of grain size and increase of surface area. Photocatalytic properties of this material were tested by decolorization of various water-soluble dyes. Effects of irradiation time and amount of GdFeO3 on photocatalytic activity were also investigated. The results show that nano-sized GdFeO3 exhibits high photocatalytic activity and that increase of irradiation time and the amount of GdFeO3 can improve its photocatalytic activity.