At present, environmental pollution is becoming increasingly serious, and efficient and environmentally friendly catalyst materials are urgently needed to improve the decomposition efficiency of pollutants. However, existing catalysts still have certain limitations in terms of electronic structure regulation and catalytic performance optimization. To solve this problem, this study conducts an in-depth discussion on the electronic structure and catalytic performance of titanium dioxide, a new environmentally friendly catalyst material, based on the CASTEP (Cambridge Serial Total Energy Package) algorithm. First, the crystal structure of titanium dioxide is optimized using density functional theory (DFT) on the CASTEP platform, and its ground state electronic band structure and state density distribution are analyzed. Next, by introducing different doping elements and simulating their effects on the electronic structure of titanium dioxide, material combinations with potentially high catalytic activity are screened out. Finally, the transition state search method is used to calculate the reaction paths and energy barriers of key catalytic reactions and evaluate the catalytic performance of the optimized materials. The experimental results show that nitrogen-doped TiO₂ has significant performance in photocatalytic degradation of formaldehyde and catalytic reduction reactions. In the photocatalytic degradation experiment, the formaldehyde degradation rate of nitrogen-doped TiO₂ reaches 95% within 60 min. In the catalytic reduction reaction, the sodium nitrite degradation rate of nitrogen-doped TiO₂ also reaches 70%. In the above data conclusions, the electronic structure of TiO₂ is optimized by nitrogen doping, which effectively improves its light absorption capacity and the separation efficiency of electron–hole pairs, thereby significantly enhancing the catalytic performance.