Water pollution caused by the discharge of hazardous organic pollutants from the food, textile, leather and paper industries is becoming a task for sustainable development. Photocatalysis is considered to be an effective method for removing organic contaminants from dye wastewater. The photocatalytic activity of ZnO-based catalyst based on its ability to generate electron-hole pairs upon photoillumination is limited due to its wide bandgap. In this study, novel GO/Gd/ZnO composites with varying percentages (0.3-1%) of Gd were fabricated via a hydrothermal approach and their photocatalytic degradation processes and performance of indigo carmine (IC) dye were investigated under light irradiation. The chemical composition and morphological features of the prepared GO/Gd/ZnO composites were characterized by X-ray diffraction, scanning electron microscopy, transmission electron microscope, energy-dispersive spectroscopy, Brunauer-Emmett-Teller, Raman and Fourier-transform infrared spectroscopy. GO/Gd/ZnO composites show much higher photocatalytic performance with complete IC dye degradation within 30 min of irradiation than bulk ZnO and GO/ZnO composite. Moreover, the optimal performance was revealed by the GO/Gd/ZnO (0.6% Gd) composite (nearly 96% degradation of IC dye). Using density functional theory, we explore the potential drop across the interface, electronic and structural properties of GO/ZnO and GO/Gd/ZnO composites. The photodegradation rate of IC dye by GO/Gd/ZnO (0.6% Gd) composite was 7.65 and 2.94-fold higher than those of bulk ZnO and GO/ZnO composite. The capture experiments revealed O-2(-) and OH as the main active radicals during the photodegradation process. The theoretical and experimental findings obtained in this study indicate that GO/Gd/ZnO photocatalyst has great potential application for eliminating environmental pollutants.