Hydrothermal synthesis of Mn doped anatase (TiO2) nanoparticles using scrolled nanotubes of TiO2 and MnCl2 as the starting materials is described. Incorporation of Mn2+ ions on the substitutional sites was confirmed using X-ray absorption fine structure (FT-XAFS) while the oxidation state Mn(II) and coordination environment were determined using both electron paramagnetic resonance (EPR) and X-ray absorption near edge spectroscopy (XANES). Two different hyperfine couplings of 96 and 86 G were found using high-field (130 GHz) EPR reporting that Mn atoms occupy two distinct sites: one undercoordinated (reconstructed surface) and the other octahedral crystalline geometry (nanoparticle core), respectively. It was found that Mn atoms that occupy surface layers are weakly bound to the anatase lattice and can be easily leached using simple dialysis, while those incorporated in the nanoparticle core are bound more strongly and cannot be removed by dialysis. Light excitation EPR reveals that Mn ions incorporated in the surface layers participate in the charge separation, while those trapped deeply in the nanoparticle core do not show any photoactivity. Doping of the core of nanoparticles with Mn2+ ions, on the other hand, enables synthesis of optically transparent films having superparamagnetic behavior at room temperatures with a saturation magnetic moment of 1.23 microB per Mn atom.