A UV-irradiation-induced magnetic transition from diamagnetism to room-temperature ferromagnetism has been experimentally observed in Ce-doped nanocrystals of TiO₂. As demonstrated by synchrotron-radiation x-ray absorption analyses, the concentration of oxygen vacancy defects was increased and the valence of Ce dopant atoms was effectively reduced as a result of UV-light irradiation, while the Ti valence remains largely unchanged. The physical mechanism underlying these effects has been theoretically investigated by using density functional theory (DFT) calculations. Based on a simple model, the experimentally observed effect of Ce valence reduction as a result of UV irradiation was theoretically reproduced. The increased Ce³⁺ concentration due to UV irradiation consequently incurs ferromagnetism in the samples as indicated by the DFT simulation. In addition, incorporation of Ce into the TiO₂ matrix results in band-gap narrowing due to the band tailing effect. The band gap width can be further decreased as the Ce³⁺ concentration is increased by UV irradiation. The irradiation induced band gap narrowing provides an ultraconvenient method for band gap engineering in TiO₂ for photocatalytic applications.