A novel In2O3/AgI heterojunction, which has a hollow tubular structure with AgI particles distributed evenly on the outer and inner surfaces of In2O3 microtubes, was fabricated from annealing of AgI adhered to MIL-68(In). The as-prepared heterojunction exhibited much higher photocatalytic activity towards tetracycline degradation compared to In2O3 and AgI. The presence of InAg-1 (1.0 g/L), which has a In2O3:AgI mole ratio of 2:1, could achieve 98.4% removal of tetracycline (20 mg/L) from the solution phase under visible light illumination in 10 min, and it had excellent reusability and stability. The In2O3/AgI heterojunction also exhibited excellent performance in photocatalytic degradation of tetracycline in different types of water matrices and under natural sunlight illumination, demonstrating its potential in practical application. The superior photocatalytic activity of InAg-1 is attributed to the heterojunction formation and generation of oxygen vacancies (OVs), which improve the separation efficiency of photoinduced e−-h+ pairs. Meanwhile, the built-in electric field (BIEF) formed with e- flowing from AgI to In2O3, which is confirmed by density functional theory calculations, helps the formation of a Z-scheme, instead of type II, heterojunction between In2O3 and AgI. Results of radical trapping experiments and electron spin resonance spectra reveal that 1O2, h+, •O2−, and •OH were the key reactive species involved in the photocatalytic degradation process. These findings indicate that Z-scheme photocatalysts with OVs could efficiently activate molecular oxygen and thus have excellent photocatalytic activity towards degradation of organic pollutants.