Novel photocatalytic and antibacterial material Zn0.9Ce0.05M0.05O (M = Er, Y, V) nanocrystals were synthesized via a facile co-precipitation technique and characterized by different analytical techniques. XRD confirmed the incorporation of Ce, Er, Y, and V, that without modifying the basic ZnO hexagonal wurtzite structure affects strongly structural properties. The Scherrer, W–H, and SSP methods were used to calculate different microstructural parameters using XRD data. The optical energy bandgap was found to be decreased in all co-doped samples (3.14–2.82 eV) calculated from UV–vis spectra by employing different methods. The effect of dopants ions on the optical properties of ZnO was also studied in detail. The FTIR spectrum inveterate the existence of Zn–O, and Zn-M–O (M = Ce, Er, Y, V) vibrational mode that further confirmed the incorporation of dopants ions. The photocatalytic performance of the grown products was evaluated under sunlight illumination against methylene blue (MB) dye. The antibacterial activity was performed against gram-positive Staphylococcus aureus and gram-negative Pseudomonas aeruginosa bacteria. The co-doped nanocrystals have shown enhanced photocatalytic and antibacterial activity as compared to Ce-doped ZnO but the Ce–V co-doped ZnO shown the highest activity. The influence of different operational parameters such as the amount of catalyst, the concentration of dye, and pH of the solution on photocatalytic activity of Ce–V co-doped ZnO nanocrystal was also studied and discussed in detail. The radical trapping experiments were also performed to identify the active species involved in photodegradation reaction. The recyclability test exhibited that Ce–V co-doped ZnO catalyst has high stability and can be reused up to the 6th cycles. Furthermore, a possible photocatalytic mechanism was also proposed for the photodegradation of MB dye.