This research investigated the optical characteristics of Cd-doped gadolinium oxide (Gd2O3) by employing density functional theory (DFT) along with the CASTEP simulation package. After the creation of a Gd2O3 supercell at an initial [2x1x1] scale, the study evaluated the altered properties of Gd2O3 at the supercell level to assess the impact of Cd-doping on the optical features of doped one. Optical properties which were explored included the examining the dielectric function, refractive index, conductivity, and loss function. The dielectric function exhibited distinct peaks at certain photon energies that corresponded to various electronic transitions between energy levels of the material. The prominent absorption peaks observed in the energy range of 0.174-1.55 eV in the imaginary part of the dielectric function. This was attributed to energy transitions occurring between specific orbitals for pure and Cd-doped gadolinium oxide. The refractive index exhibited stability at lower energy levels, while the conductivity curves displayed excitonic behavior in response to Cd-doping at the supercellular level. Furthermore, the Cd-doping resulted in an increase in absorption, as indicated by the simulated changes in the loss function