Hybrid'' nanoparticles (NPs) comprising physically fused Fe2O3 and Pd domains can act as efficient photocatalysts, driving photoreduction of metal salts to metal nanoparticles. The overall photocatalytic redox cycle of the composite entails reduction on the Pd domain and oxidation on the Fe2O3 part. The photocatalytic activity of Fe2O3-Pd hybrids is three times higher than that of statistical mixtures of Fe2O3 NPs and Pd NPs.