Surface modification of TiO₂ with metal oxide nanoclusters is a strategy for the development of new photocatalyst materials. We have studied modification of the (110) surface of rutile TiO₂ with ceria nanoclusters using density functional theory corrected for on-site Coulomb interactions (DFT+U). We focus on the impact of surface modification on key properties governing the performance of photocatalysts, including light absorption, photoexcited charge carrier separation, reducibility and surface reactivity. Our results show that adsorption of the CeO₂ nanoclusters, with compositions Ce₅O₁₀ and Ce₆O_­12, is favourable at the rutile (110) surface and that the nanocluster-surface composites favour non-stoichiometry in the adsorbed ceria so that reduced Ce ions will be present in the ground state. The presence of reduced Ce ions and low coordinated O sites in the nanocluster lead to the emergence of energy states in the energy gap of the TiO₂ host, which potentially enhance the visible light response. We show, through an examination of oxygen vacancy formation, that the composite systems are reducible with moderate energy costs. Photoexcited electrons and holes localize on Ce and O sites of the supported nanoclusters. The interaction of CO₂ and H₂O is favourable at multiple sites of the reduced CeO_x-TiO₂ composite surfaces. CO₂ adsorbs and activates, while H₂O spontaneously dissociates at oxygen vacancy sites.