A molecular precursor approach to titania (anatase) nanopowders modified with different amounts of rare-earth elements (REEs: Eu, Sm, and Y) was developed using the interaction of REE nitrates with titanium alkoxides by a two-step solvothermal-combustion method. The nature of an emerging intermetallic intermediate was revealed unexpectedly for the applied conditions via a single-crystal study of the isolated bimetallic isopropoxide nitrate complex [Ti2Y(iPrO)9(NO3)2], a nonoxo-substituted compound. Powders of the final reaction products were characterized by powder X-ray diffraction, scanning electron microscopy-energy-dispersive spectroscopy, Fourier transform infrared, X-ray photoelectron spectroscopy, Raman spectroscopy, and photoluminescence (PL). The addition of REEs stabilized the anatase phase up to ca. 700 °C before phase transformation into rutile became evident. The photocatalytic activity of titania modified with Eu3+ and Sm3+ was compared with that of Degussa P25 titania as the control. PL studies indicated the incorporation of Eu and Sm cations into titania (anatase) at lower annealing temperatures (500 °C), but an exclusion to the surface occurred when the annealing temperature was increased to 700 °C. The efficiency of the modified titania was inferior to the control titania while illuminated within narrow wavelength intervals (445-465 and 510-530 nm), but when subjected to a wide range of visible radiation, the Eu3+- and Sm3+-modified titania outperformed the control, which was attributed both to doping of the band structure of TiO2 with additional energy levels and to the surface chemistry of the REE-modified titania.