The coupling of carbon nanodots (C-Dots) with graphitic carbon nitride (g-C₃N₄) has been demonstrated to boost the overall photocatalytic solar water splitting efficiency. However, the understanding on the role of the C-Dots and how the structure of C-Dots influences the photocatalytic reaction is still limited. In this work, we investigate the excited states of some C-Dot/g-C₃N₄ composites with the C-Dots containing different functional groups including –OH, –CHO and –COOH by first-principles many-body Green's function theory. It is found that the increase of efficiency can be ascribed to the high separation rate and the low recombination rate of the electron–hole pair benefiting from the emergence of the charge-transfer excited state between the C-Dots and g-C₃N₄. Functional groups on the C-Dots play a crucial role in determining the charge transfer direction, active sites for reduction reaction and oxidation reaction of water, and whether the reaction is a four-electron process or a two-electron/two-electron process. These results can provide guidance for the design and optimization of the C-Dots for heterojunction photocatalysts.