Hematite (Fe₂O₃) is a promising candidate for hydrogen production via water splitting despite the difference in the characteristic lengths for photon absorption and charge carrier transport. Metallic nanoparticles supporting localized surface plasmon resonances (LSPRs), i.e. collective, non-propagating oscillations of electrons excited by an external electric field, are well-suited to improve the optoelectronic properties of hematite, in particular for ultra-thin films. Several mechanisms have been proposed to explain the observed LSPR mediated performance enhancement. In this work, the improvement of incident photon-to-electron conversion efficiency (IPCE) of ultra-thin hematite photoanodes functionalized with Au nanodisks was investigated. The improvement in IPCE at wavelengths close to the bandgap in hematite was found to correlate well with the increase in optical extinction owing to the excitation of LSPR in the nanodisks. Finite-difference time-domain calculations of the near-field distribution around the nanodisks enabled us to elucidate the mechanism behind the IPCE enhancement and its variations with the position of the plasmonic resonance with respect to the bandgap of hematite. Both were attributed to an increased charge generation close to the hematite–electrolyte interface caused by the electric field enhancement in hematite. The results presented here are directly applicable to other semiconductors with similar properties to hematite and are expected to be helpful in future design of optimized photoanodes, where, for instance, functionalization with metallic nanoparticles is combined with material doping and nanostructuring.