The effect of swift heavy ion irradiation on structural, optical, and microstructural properties of TiO2 has been studied. Pellets prepared from TiO2 nanoparticles have been irradiated by 120 MeV Ag ions at different fluences ranging from 5 × 1011 to 1 × 1013 ions cm−2. X‐ray diffraction (XRD), Raman, UV–visible, and photoluminescence (PL) studies indicated anatase phase both in as‐prepared and irradiated pellets. XRD study revealed the crystallite size of the particles as ~16 nm, which is close to the upper limit of the particle size where anatase phase is most stable. Our study thus established the importance of the initial microstructure on the irradiation response of the nanoparticles. Though irradiation did not affect the crystal structure and the polycrystalline nature of the anatase TiO2, it suppressed the crystalline volume fraction. Poisson fitting of the suppression of XRD peak area with irradiation fluence revealed radius of the track of each 120 MeV Ag ion in TiO2 nanoparticles as ~2.1 nm. Irradiation, in addition to creating disorder, darkened the surface of the pellets because of the creation of oxygen vacancies in the TiO6 octahedra. Reorganization of these defects led to suppression of the band gap of TiO2 nanoparticles from 3.19 eV of the pristine sample to 3 eV for samples irradiated beyond a critical fluences 3 × 1012 ions cm−2. The size of the nanoparticles and their agglomeration remained unaffected by irradiation as indicated by field emission scanning electron micrographs.