Boron nitride quantum dots (BNQDs) are emerging nanomaterials with promising applications in photocatalysis and optoelectronics. Chemical functionalization effectively tunes the optoelectronic properties and photocatalytic performance of BNQDs. This study investigates the impact of oxygen doping and functionalization with urea, thiourea, and p‐phenylenediamine (PPD) on BNQD properties. Density functional theory calculations reveal that these functional groups introduce new electronic states within the bandgap, shifting absorption spectra and reducing the bandgap due to ligand molecular orbital contributions. Functionalization also adjusts the energy‐level alignment between BNQDs and cocatalysts, enhancing interfacial charge transfer. Oxygen‐doped, chemically functionalized BNQDs exhibit significantly higher first‐order hyperpolarizability, up to 17 times greater than pristine BNQDs, enabling superior optical nonlinearities. Additionally, PPD functionalization leads to a remarkable 18.2% photocatalytic energy conversion efficiency under simulated solar irradiation. These achieved quantum yields result from bandgap engineering, expanded light harvesting, increased exciton densities, prolonged exciton lifetimes, and improved charge separation and transfer dynamics. This study provides crucial insights into property tuning mechanisms, establishing the promising potential of chemically functionalized BNQDs for energy conversion and optoelectronic technologies.