ZnO-based electrodes for one-step photocatalytic water splitting are designed by incorporating InN. The electronic and optical properties of (ZnO)_1−x(InN)_x alloys and ZnO with InN-like cluster formations ZnO:(InN)_x are analyzed by means of first-principles approaches. We calculate the energy gaps E_g, the band-edge energies relative to the vacuum level, and the optical absorption, employing the GW₀ method to describe single-particle excitations and the Bethe–Salpeter equation to model the two-particle exciton interactions. For ZnO and InN, the valence-band maximum (VBM) is E_VBM ≈ −7.3 and −5.7 eV, and the energy gap is E_g ≈ 3.3 and 0.7 eV, respectively. Incorporating InN into ZnO, the random (ZnO)_1−x(InN)_x alloys up-shifts the VBM and down-shifts the conduction-band minimum (CBM). In addition, the presence of InN-like clusters enhances this effect and significantly narrows the band gap. For instance, the VBM and the energy gap for 12.5% InN are E_VBM ≈ −6.5 and −6.1 eV, and E_g ≈ 2.2 and 1.9 eV for the alloy and the cluster structure, respectively. This impact on the electronic structure favors thus visible light absorption. With proper nanoclusters, the band edges straddle the redox potential levels of H⁺/H₂ and O₂/H₂O, suggesting that ZnO–InN nanostructures can enhance the photocatalytic activity for overall solar-driven water splitting.