Hematite is a good candidate for solar water splitting because of its earth-abundance, moderate band gap, and electrochemical stability. However, the improper energy band position to absorb the visible region of sunlight has limited any increase of the efficiency. In this study, a facile solution-based photoreduction process is employed to fabricate a hematite/silver hierarchical nanostructure. By irradiating hydrothermally grown hematite nanowire with UV light, Ag nanoparticles are synthesized rapidly on the surface of the hematite nanowire, the size of which is easily controllable by changing the UV irradiation time. The enhanced optical performance of the resultant hierarchical nanostructure is confirmed by various analytical tools that include UV/Vis absorption, photoluminescence, and Raman spectroscopy together with the theoretical estimation through finite-difference time-domain simulation. Furthermore, the hierarchical hematite/silver nanostructure is applied as a photoanode in a photo-electrochemical cell for water splitting with enhanced efficiency.