AbstractComplete metal‐free P‐functionalized carbon nanomaterials are synthesized from a single molecular precursor, phytic acid, for photocatalytic solar H₂ production and simultaneous organic transformation of 4‐methyl benzyl alcohol to 4‐methyl benzaldehyde by managing the complete redox cycle. It is observed that by increasing the carbonization time, P‐functionalized amorphous carbon dots convert to the highly defined 2D sheet‐like nanostructure with optimum P‐functionality, resulting in efficient light absorption, charge separation, and improved active sites for photocatalysis. Finally, the highly defined sheet‐like structure converts to a more defected aggregated form, resulting in the depletion of photocatalytic efficiency. The structural and elemental features are further correlated with the ongoing photophysics by means of steady‐state and time‐resolved fluorescence spectroscopy. Transient photocurrent responses and Mott‐Schottky plots directly support the optimization of P‐functionalized carbon nanostructure for efficient photocatalysis. Finally, the detailed computational studies are carried out to unveil the charge separation mechanism and the crucial role of P‐functionalities as active sites for better charge accumulation as well as H₂O adsorption on the surface. Overall, the in‐depth structure–property correlation and critical optimization of the heteroatom functionalized carbon nanomaterials will open up new possibilities for further development of metal‐free photocatalysts for solar‐energy conversion devices.