Cerium (IV) oxide (CeO2), samarium (Sm) and gadolinium (Gd) doped CeO2 nanoparticles were prepared using microwave technique. The effect of microwave irradiation time, microwave power and pH of the starting solution on the structure and crystallite size were investigated. The prepared nanoparticles were characterized using X-ray diffraction, FT-Raman spectroscopy, and transmission electron microscope. The photocatalytic activity of the as-prepared CeO2, Sm and Gd doped CeO2 toward degradation of methylene blue (MB) dye was investigated under UV light irradiation. The effect of pH, the amount of catalyst and the dye concentration on the degradation extent were studied. The photocatalytic activity of CeO2 was kinetically enhanced by trivalent cation (Gd and Sm) doping. The results revealed that Gd doped CeO2 nanoparticles exhibit the best catalytic degradation activity on MB under UV irradiation. For clarifying the environmental safety of the by products produced from the degradation process, the pathways of MB degradation were followed using liquid chromatography/mass spectroscopy (LC/MS). The total organic carbon content measurements confirmed the results obtained by LC/MS. Compared to the same nanoparticles prepared by another method, it was found that Gd doped CeO2 prepared by hydrothermal process was able to mineralize MB dye completely under UV light irradiation.