The effects of on-surface OH groups on the structural and optical properties of small TiO₂ particles have been studied in order to obtain knowledge about the optical behaviour of the TiO₂ nanoparticles in solutions. The standard density functional theory was used to model the structural changes, and time-dependent density functional theory was used to address the changes in the photoabsorption characteristics of an anatase-structured (TiO₂)₁₆ cluster. It was shown that the OH groups can alter both the geometric and electronic structure of the clusters, resulting in changes in the optical properties. The large blue shift, obtained in earlier calculations for TiO₂ nanoparticles as compared with bulk TiO₂, is shown to be reduced by OH adsorption.