In this paper structural, optical, photoluminescence, and photocatalytic properties of TiO2and TiO2:(2.6 at. % Tb) thin films have been compared. Thin films were prepared by high-energy reactive magnetron sputtering process, which enables obtaining highly nanocrystalline rutile structure of deposited films. Crystallites sizes were 8.7 nm and 6.6 nm for TiO2and TiO2:Tb, respectively. Surface of prepared thin films was homogenous with small roughness of ca. 7.2 and 2.1 nm in case of TiO2and TiO2:Tb samples, respectively. Optical properties measurements have shown that the incorporation of Tb into TiO2matrix has not changed significantly the thin films transparency. It also enables obtaining photoluminescence effect in wide range from 350 to 800 nm, what is unique phenomenon in case of TiO2with rutile structure. Moreover, it has been found that the incorporation of 2.6 at. % of Tb has increased the photocatalytic activity more than two times as compared to undoped TiO2. Additionally, for the first time in the current state of the art, the relationship between photoluminescence effect, photocatalytic activity, and surface properties of TiO2:Tb thin films has been theoretically explained.