The influence of annealing temperature on the Iron oxide (α-Fe2O3) nanoparticles (NPs) was synthesized via simple co-precipitation method. The prepared α-Fe2O3 NPs are characterized using X-Ray Diffraction (XRD) analysis, Fourier-Transform Infrared (FTIR) spectroscopy, Scanning Electron Microscopy (SEM) and Vibrating Sample Magnetometer (VSM) respectively. The powder XRD results indicated that the presence of α-Fe2O3 NPs with hematite phase and the average crystallite size was found to be 25–30 nm. The morphological studies suggested that α-Fe2O3 NPs at 700 °C sample showed no particle aggregation or agglomeration of crystals and the crystals are highly oriented, the average particle size of the smaller crystal is found to be ~ 100–150 nm and the bigger one is ~ 450–500 nm. The FT-IR characterization revealed the presence of sharp Fe–O peaks obtained in the spectra. The magnetic properties of the nanoparticles were studied by Vibrating Sample Magnetometer (VSM) at room temperature. All the samples exhibited characteristic hysteresis loop and more importantly the sample calcined at 700 °C attained the ferromagnetic behaviour of α-Fe2O3 with magnetization (Ms) ~ 0.471 emu/g, Coercivity (Hc) ~ 355.66 Oe, Retentivity (Mr) ~ 0.043 emu/g. Hence, the obtained results confirmed that α-Fe2O3 NPs are best suited for promising magnetic resonance imaging (MRI) as the contrast agents, cell magnetic separation, hyperthermia applications and so on.