The crystalline growth of the layered photocatalyst bismuth oxyiodide (BiOI) was restricted by a nanoscopic layered silicate clay template, leading to reduced particle size, altered surface chemistry, and improved water dispersibility. The reduced particle size and dominant {001} facets aided photogenerated charge separation along the axis of the internal electric field of BiOI, leading to 8.2× enhancement in the apparent quantum efficiency for MO degradation and 3.7× enhancement in the photocurrent conversion efficiency over those of control BiOI. Furthermore, successful templating of BiOI growth on laponite was found to be dependent on the presence of both polyvinylpyrrolidone and mannitol as well as a a pH lower than 3, a finding supported by all-atom molecular dynamics simulations. This study will guide future efforts at templated growth of photocatalysts at interfaces, particularly where control over crystal habit is essential to enhanced performance.