Abstract Photothermal CO 2 reduction technology has attracted tremendous interest as a solution for the greenhouse effect and energy crisis, and thereby it plays a critical role in solving environmental problems and generating economic benefits. In 2 O 3− x has emerged as a potential photothermal catalyst for CO 2 conversion into CO via the light‐driven reverse water gas shift reaction. However, it is still a challenge to modulate the structural and electronic characteristics of In 2 O 3 to enhance photothermocatalytic activity synergistically. In this work, a novel route to activate inert In(OH) 3 into 2D black In 2 O 3− x nanosheets via photoinduced defect engineering is proposed. Theoretical calculations and experimental results verify the existence of bifunctional oxygen vacancies in the 2D black In 2 O 3− x nanosheets host, which enhances light harvesting and chemical adsorption of CO 2 molecules dramatically, achieving 103.21 mmol g cat −1 h −1 with near‐unity selectivity for CO generation and meanwhile excellent stability. This study reveals an exciting phenomenon that light is an ideal external stimulus on the layered In 2 O 3 system, and its electronic structure can be adjusted efficiently through photoinduced defect engineering; it can be anticipated that this synthesis strategy can be extended to wider application fields.