This paper reports the sol-gel synthesis of Al2O3-Nd2O3 (Al-Nd-x; x = 5%, 10%, 15% and 25% of Nd2O3) binary oxides and the photodegradation of diclofenac activated by UV light. Al-Nd-based catalysts were analyzed by N2 physisorption, XRD, TEM, SEM, UV-Vis and PL spectroscopies. The inclusion of Nd2O3 in the aluminum oxide matrix in the 10–25% range reduced the band gap energies from 3.35 eV for the γ-Al2O3 to values as low as 3.13–3.20 eV, which are typical of semiconductor materials absorbing in the UV region. γ-Al2O3 and Al-Nd-x binary oxides reached more than 92.0% of photoconverted diclofenac after 40 min of reaction. However, the photocatalytic activity in the diclofenac degradation using Al-Nd-x with Nd2O3 contents in the range 10–25% was improved with respect to that of γ-Al2O3 at short reaction times. The diclofenac photoconversion using γ-Al2O3 was 63.0% at 10 min of UV light exposure, whereas Al-Nd-15 binary oxide reached 82.0% at this reaction time. The rate constants determined from the kinetic experiments revealed that the highest activities in the aqueous medium were reached with the catalysts with 15% and 25% of Nd2O3, and these compounds presented the lowest band gap energies. The experimental results also demonstrated that Nd2O3 acts as a separator of charges favoring the decrease in the recombination rate of electron-hole pairs.