The first example of a rare-earth metal nitrate-selenite nonlinear optical (NLO) crystal, Gd(NO3)(Se2O5)·3H2O (1), was synthesized by hydrothermal reaction. This compound crystallizes in the noncentrosymmetric space group P212121, and its structure features two-dimensional (2D) [Gd(NO3)(Se2O5)]∞ layers, extending to a pseudo-3D framework linked by hydrogen bonds. 1 exhibits a phase-matchable SHG efficiency about 0.2 times that of KH2PO4 (KDP) and a large laser damage threshold of 236.26 MW cm-2. The UV-Vis-NIR diffuse reflectance spectroscopy study shows that the UV cutoff edge of 1 is 224 nm, which is the shortest value observed among selenite-based NLO materials. The birefringence of 1 is 0.109@1064 nm based on density functional theory calculations. These optical properties make 1 a potential UV NLO material. Theoretical studies using density functional theory have been implemented to further understand the relationship between its optical properties and band structures.