Photocatalytic processes are able to decompose dyes and toxic substances in the water environment. This fascinating topic can address many environmental concerns about polluted water. Zinc oxide is widely used as a photocatalyst in various nanocomposites. In this study, the formation of a nanostructure including cyclodextrin and ZnO has been investigated by density functional theory (DFT) in gas and aqueous phases at B3LYP and M06-2X functional levels. The calculated binding energies and natural bond orbital (NBO) analysis indicate the existence of strong chemical interactions of ZnO with the inside of the cyclodextrin (CD) cavity during CD-ZnO formation. In addition, the interaction of methylene blue (MB) and phenol red (PhR) dyes with CD-ZnO nanostructure has been investigated. The dyes’ adsorption energy values on the CD-ZnO ranged from − 243.4 to − 55.9 kJ. These energies and the density of states diagrams in their complexes confirm the strong interaction of MB and PhR with CD-ZnO. This strong interaction of dyes with nanostructure can support the mechanisms that lead to the photocatalytic degradation of dye molecules.