A new form of TiO2 which is black in color has been shown to exhibit high efficiency for photocatalytic reactions under solar radiation [X. Chen, L. Liu, P. Y. Yu, and S. S. Mao, Science 331, 746 (2011)]. However, the mechanism behind this disorder-engineering process is not fully understood. In this Letter, based on density functional theory, we describe the role of hydrogen in producing lattice disorder in the anatase nanocrystals. We clarify further that the highly localized nature of the midgap states results in spatial separation of photoexcited electrons and holes in black TiO2, and that accounts for its high photocatalytic efficiency.