The rare earth metal oxide nanoparticles such as gadolinium oxide nanoparticles (Gd2O3 NPs) have been synthesized by green synthesis process using methanolic extract of Moringa oleifera (M oleifera) peel. In this process, the Gd2O3 NPs formation was observed at 280–300 nm in UV–Vis spectroscopy. The XRD pattern of the synthesized Gd2O3 NPs was exactly matched with JCPDS No 3-065-3181which confirms the crystalline nature of Gd2O3 NPs. In addition, Energy-dispersive X-ray spectroscopy (EDX) analysis was stated that Gd and O elements were present as 70.31 and 29.69%, respectively in Gd2O3 NPs. The SEM and TEM analysis were said Gd2O3 NPs are in rod shape and 26 ± 2 nm in size. Further the synthesized Gd2O3 NPs were confirmed by X-ray photoemission spectroscopy (XPS). The synthesized Gd2O3 NPs were further examined for anti-fungal activity against Alternaria saloni (A saloni) and Sclerrotium rolfsii (S rolfsii) and it showed moderate activity. Also, Gd2O3 NPs evaluated as good antibacterial agent against different Gram +ve and Gram −ve bacteria. Moreover, the toxicity of the Gd2O3 NPs on red blood cells (RBCs) of the human blood was determined using hemolytic assay, the obtained results were stated the synthesized Gd2O3 NPs are nontoxic to the human erythrocytes. The photocatalytic activity against malachite green (MG) dye was tested and confirmed as 92% of dye was degraded within 2 hr by Gd2O3 NPs. The results were stated the green synthesized Gd2O3 NPs are good anti-fungal agents, nontoxic and we can use as a photocatalyst. Copyright © 2019 John Wiley & Sons, Ltd. © 2019 American Institute of Chemical Engineers