In this study, CeO2 nanoparticles were synthesized using an eco-friendly approach involving Cymbopogon citratus (lemongrass) leaf extract of un-doped cerium oxide (CeO2), Cd-doped (Cd-CeO2), and Ag-coated (CeO2-Ag) nanoparticles. This natural reducing and capping agent offers a sustainable alternative to conventional chemical methods. The synthesized nanoparticles were characterized using various techniques, including UV–visible spectroscopy (UV–vis), Fourier transform infrared (FTIR) spectroscopy, X-ray diffraction (XRD), scanning electron microscopy (SEM), high-resolution transmission electron microscopy (HRTEM), and energy-dispersive X-ray spectroscopy (EDAX). The synthesized nanoparticles exhibited several promising properties. The un-doped CeO2 nanoparticles exhibited a bandgap of 2.91 eV, which decreased after doping/coating reaching 2.64 eV for Cd-CeO2 and 2.38 eV for CeO2-Ag and confirmed modification of nanoparticles for enhanced optoelectronic applications. The average crystallite size was in the range of 3–20 nm, indicating a high surface area-to-volume ratio and slightly crystalline nature. The XRD data was well aligned with the SAED pattern showing co-relation between them. The nanoparticles exhibited a spherical shape with a smooth surface, which can enhance their catalytic activity and biocompatibility. The reduction of 4-nitrophenol to 4-aminophenol, achieving a rate of up to 96.53%, was enhanced due to the coating of silver on the CeO2 nanoparticles. Similarly, the photocatalytic degradation of methylene blue, with an efficiency of 89.56%, improved due to the doping of cadmium with CeO2. This facilitated better charge separation and enhanced photocatalytic activity. In biomedical applications, the antioxidant study revealed that the nanoparticles effectively reduced DPPH radicals by 70% ± 2%, using ascorbic acid as the standard. Additionally, the nanoparticles exhibited strong antibacterial activity against Gram-positive and Gram-negative bacteria,