The conversion of N₂ and CO₂ into urea through a photocatalytic C–N coupling reaction under ambient conditions serves as a novel green avenue for urea synthesis. However, the poor adsorption and C–N coupling capability of inert gas molecules hinder the efficient catalytic activity. Herein, palladium-decorated CeO₂ (Pd–CeO₂) was demonstrated as an efficient photocatalyst for C–N coupling reaction and delivered a remarkable urea yield rate of 9.2 μmol h⁻¹ g⁻¹, which was superior to that of pristine CeO₂ (2.5 μmol h⁻¹ g⁻¹). Comprehensive investigations further endorsed that the emerged space-charge region in the CeO₂(111)/Pd(111) interface not only effectively facilitates the targeted capture and activation of inert CO₂ and N₂ but also stabilizes the formation of key intermediates (*NCON). Besides, the effective inhibition of the endothermic *NNH intermediate is conducive to the subsequent C–N coupling process and the improvement of reaction selectivity. The reaction mechanism was studied in detail by density functional theory (DFT) with the formation of a C–N bond via a thermodynamically spontaneous reaction between *NN* and CO. This work provides novel insights into the conversion of CO₂ and N₂ into urea.