The fluorescence and room temperature activity of a palygorskite supported Y2O3:(Eu(3+),Au(3+)) nanocomposite were investigated to design a fluorescence-indicated catalyst. The effects of Au(3+) doping on the structure and surface properties of the host material were systematically characterized. The fluorescence intensity of Y2O3:Eu(3+) was affected by Au(3+) doping, which was related to the crystallinity of Y2O3. Excess Au(3+) ions were segregated to the host surface and reduced to metallic Au. The local symmetry of Eu(3+) was reduced by Au(3+) doping, which benefited the energy transfer between Eu(3+) and Au(3+). Energy absorbed by Eu(3+) was transferred from Au(3+) to metallic Au, where electrons were produced. These electrons were absorbed by O2 to change into O2(-), which acted as the oxidant for ortho-dichlorobenzene (o-DCB). The variation of fluorescence intensity during the catalytic reaction was observed. The room temperature catalytic activity of the nanocomposite under UV irradiation was revealed. The as-synthesized nanocomposite might have potential applications in environmental fields.