Recently, there has been an increasing interest in the research of photocatalytic reduction of CO2 with H2O, an innovative way to simultaneously reduce the level of CO2 emissions and produce renewable and sustainable fuels. Titanium dioxide (TiO2) and modified TiO2 composites are the most widely used photocatalysts in this application; however, the reaction mechanism of CO2 photoreduction on TiO2 photocatalysts is still not very clear, and the reaction intermediates and product selectivity are not well understood. This review aims to summarize the recent advances in the exploration of reaction mechanism of CO2 photoreduction with H2O in correlation with the TiO2 photocatalyst characteristics. Discussions are provided in the following sections: (1) CO2 adsorption, activation and dissociation on TiO2 photocatalyst; (2) mechanism and approaches to enhance charge transfer from photocatalyst to reactants (i.e., CO2 and H2O); and (3) surface intermediates, reaction pathways, and product selectivity. In each section, the effects of material properties are discussed, including TiO2 crystal phases (e.g., anatase, rutile, brookite, or their mixtures), surface defects (e.g., oxygen vacancy and Ti3+) and material modifications (e.g., incorporation of noble metal, metal oxide, and/or nonmetal species to TiO2). Finally, perspectives on future research directions and open issues to be addressed in CO2 photoreduction are outlined in this review paper.