The compound nanoparticle of TiO2 doped with rare earth ions Y3+ was prepared under the optimum condition of preparing nanoparticle TiO2 with sol-gel processing. TiO2 and doped TiO2 were both characterized by XRD, TEM and DRS. The experiments of photocatalytic degradation phenol was used to investigate the activity of Y3+/TiO2 and its effect on the reaction process. The XRD results show that TiO2 and doped TiO2 are the mixture of anatase and rutile, and the ratio of anatase to rutile was 3:1; doping can retard the development of grain size of TiO2 and decrease the diameter of TiO2 to about 10nm. DRS are used to investigate the ability of absorbing light and the shift of spectrums of TiO2 and doped TiO2. The results show doping makes the light absorption increase and the spectrums of 1.5Y3+/TiO2 and 3.0Y3+/TiO2 both show red shift. The results of experiment of photocatalytic degradation of phenol show that the optimum doping content is wt(Y3+)=1.5%, and the photocatalytic degradation ratio of phenol increases by about 20% compared with the undoped TiO2.