Nanoparticulate titanium dioxide (TiO2) is widely used in cosmetic products and sunscreens. However, primarily due to their photocatalytic activity, some TiO2 products have been shown to be cytotoxic. Thus, the aim of this study was to reduce the photoactivity and consequent cytotoxicity of TiO2 nanoparticles. As such, in this work, yttrium oxide (Y2O3) was deposited onto TiO2, at 5% and 10% Y/Ti weight ratio, via a hydrothermal method. The nanocomposites produced, TiO2@Y2O3 5 and 10 wt%, were characterised to assess their physical, photochemical and toxicological properties. These materials exhibit a uniform yttria coating, enhanced UV attenuation in the 280–350 nm range and significantly reduced photoactivity compared with a pristine commercial TiO2 sample (Degussa Aeroxide® P25). Furthermore, the comparative cytotoxicity and photo-cytotoxicity of these materials to a human keratinocyte cell line (HaCaT), was assessed using a colorimetric tetrazolium salt (MTS) assay. Following 24-hour incubation with cells, both Y2O3 loadings exhibited improved biocompatibility with HaCaT cells, compared to the pristine TiO2 sample, under all subsequent test conditions. In conclusion, the results highlight the potential of these materials for use in products, applied topically, with sun protection in mind.