Density functional theory calculations were carried out for Ni1−xMgxO alloys using both GGA+U method and hybrid exchange-correlation functional HSE06. We find that the band gap of Ni1−xMgxO is a nonlinear function of MgO concentration with a strong bowing behavior at high Mg content. Band edge alignment is determined using heterojunction superlattice models. The valence-band-maximum of Ni1−xMgxO is shown to be tunable within a range of 0.90 eV. By comparing with the highest-occupied-molecular-orbital levels of some of the most widely used dye molecules, we propose that Ni1−xMgxO is a promising alternate to replace NiO photocathode in dye-sensitized solar cells with an enhanced open-circuit voltage and transparency of cathode films.