Engineering of the optical, electronic, and magnetic properties of hexagonal boron nitride (h-BN) nanomaterials via oxygen doping and functionalization has been envisaged in theory. However, it is still unclear as to what extent these properties can be altered using such methodology because of the lack of significant experimental progress and systematic theoretical investigations. Therefore, here, comprehensive theoretical predictions verified by solid experimental confirmations are provided, which unambiguously answer this long-standing question. Narrowing of the optical bandgap in h-BN nanosheets (from ���5.5 eV down to 2.1 eV) and the appearance of paramagnetism and photoluminescence (of both Stokes and anti-Stokes types) in them after oxygen doping and functionalization are discussed. These results are highly valuable for further advances in semiconducting nanoscale electronics, optoelectronics, and spintronics.