Our research was focused on the evaluation of the photocatalytic and antimicrobial properties, as well as biocompatibility of cotton fabrics coated with fresh and reused dispersions of nanoscaled TiO2-1% Fe-N particles prepared by the hydrothermal method and post-annealed at 400 °C. The powders were characterized by X-ray diffraction (XRD), Mössbauer spectroscopy and X-ray photoelectron spectroscopy. The textiles coated with doped TiO2 were characterized by scanning electron microscopy and energy dispersive X-ray analyses, and their photocatalytic effect by trichromatic coordinates of the materials stained with methylene blue and coffee and exposed to UV, visible and solar light. The resulting doped TiO2 consists of a mixture of prevailing anatase phase and a small amount (~15%–20%) of brookite, containing Fe3+ and nitrogen. By reusing dispersions of TiO2-1% Fe-N, high amounts of photocatalysts were deposited on the fabrics, and the photocatalytic activity was improved, especially under visible light. The treated fabrics exhibited specific antimicrobial features, which were dependent on their composition, microbial strain and incubation time. The in vitro biocompatibility evaluation on CCD-1070Sk dermal fibroblasts confirmed the absence of cytotoxicity after short-term exposure. These results highlight the potential of TiO2-1% Fe-N nanoparticles for further use in the development of innovative self-cleaning and antimicrobial photocatalytic cotton textiles. However, further studies are required in order to assess the long-term skin exposure effects and the possible particle release due to wearing.