PVP-coated nanoparticles are increasingly being developed for photocatalytic applications. The fabrication of PVPcoated Fe2O3 nanoparticles is demonstrated in this work using a novel method. The existence of PVP and Fe2O3 phases is identified by powder XRD analysis. SEM, FTIR, and UV techniques were used to examine the morphology and structural examination of the materials. UV–Visible DRS studies reveal optoelectronic transfer and redshifts in PVP-coated composites. Besides, the reduction of average particle size was also identified by SEM and XRD. The potential application of PVP-coated Fe2O3 as a photocatalyst was investigated with the use of an aqueous solution of degraded Congo Red dye. Data from photocatalytic research show that Fe3O4-coated PVP (6 wt%) exhibits considerably better photocatalytic activity towards the destruction of CR dyes. The improved photocatalytic activity of the hybrid composite is caused by the combination of phases of PVP and Fe2O3 with differing band gaps. Detailed evidence of the photocatalytic activity's mechanism is also provided.