For the purpose of hydrogen production with free solar energy, the photoelectrochemical (PEC) water-splitting process grabbed attention as a sustainable route. PEC systems offer several benefits to produce hydrogen, including low environmental impact. For the PEC water oxidation process, Bi2O3 (BO) is considered a very promising semiconductor due to its moderate bandgap of 2.65 eV and can exist in various phases. In order to determine the optimum growth temperature of Bi2O3 for the PEC water splitting reaction and the photocatalytic dye degradation reaction, a series of bismuth (III) oxide semiconductors (SC) is developed in the present work using bismuth nitrate as a precursor varying the annealing temperatures (200–800 °C) in air. The optimized Bi2O3 exhibits the highest photo-activity for the degradation of Rhodamine B target pollutants, which was confirmed by different physicochemical and photocatalytic experimental studies. The sample annealed at an optimized temperature of 650 °C achieved the maximum photocurrent of 0.19 mA cm−2 for water splitting reaction in the presence of phosphate buffer solution with 0.1 M Na2SO4 (pH 7), under periodic chopped illumination of UV–vis light with 100 mW cm−2 light intensity at 1.17 V versus Ag/AgCl. The n-type nature of the semiconductor has been determined through Mott-Schottky analysis. Bi2O3 facilitates the photo-activated electron–hole charge separation and migration due to its relative band position, and as a result, the stable performance of the semiconductor was also reported. The degradation reaction in the presence of scavenger materials such as triethanolamine (TEOA), tertiary butyl alcohol (TBA) and p-benzoquinone (BQ) has also been studied to propose the most plausible mechanism of degradation reaction.