Novel tri-phase ZnO-Yb2O3–Pr2O3 heterostructured nanocomposite was synthesized by the co-precipitation technique, and its application as an efficient antibacterial agent and photocatalyst were studied. The grown sample was characterized by XRD, FTIR, Raman, UV–vis, IV, and SEM to explore the structural, optical, electrical, and morphological properties. The XRD pattern revealed the presence of diffraction peaks related to ZnO (hexagonal), Yb2O3 (cubic) and Pr2O3 (hexagonal) in the nanocomposite. The microstructural parameters were calculated using Scherrer plot, W–H and SSP methods. The optical energy bandgap was 2.8 eV determined from UV–vis spectroscopy, specified that it could be used as a proficient photocatalyst under sunlight illumination. The FTIR spectrum confirmed the presence of characteristics vibrational bands associated with the Zn–O, Pr–O, and Yb–O bond vibrations at 463, 535 and 562 cm−1, respectively. The Raman spectrum exhibits the fundamental optical phonon modes related to ZnO, Yb2O3 and Pr2O3 in the nanocomposite, confirmed the successful formation of the nanocomposite. IV measurement showed the high electrical conductivity of grown nanocomposite. SEM images revealed that nanocomposite has a porous type morphology with high agglomeration. The antibacterial activity was performed against S. aureus (G-positive) and E. coli (G-negative) bacteria. The zone of inhibition (ZOI) shown that the nanocomposite has the highest activity against S. aureus with a ZOI 31 mm. The photocatalytic activity of the ZnO-Yb2O3–Pr2O3 nanocomposite was carried out for the degradation of MB dye under sunlight irradiation, revealed 99.8% degradation in 60 min. The effect of several operational parameters such as catalyst dose, dye concentrations, pH of reaction along with reusability and radical trapping experiments were performed and discussed in detail. A possible schematic model was proposed to elaborate the photocatalytic mechanism. Furthermore, this work introduces a novel material to enhance the photocatalytic and antibacterial activity for environmental and biomedical application.