The size and crystalline phase changes of Fe2O3 nanoparticles formed in a H2/O2 flame have been investigated. At flame temperatures below 1350 °C, the mean particle size increased monotonously with the distance from the burner edge; but in high-temperature flames above 1650 °C, it suddenly decreased from 20 to ∼3 nm with the distance from the burner edge. The results of X-ray diffraction and high-resolution transmission electron microscopy showed that this sudden reduction of the size of nanoparticles was accompanied by a partial phase transformation from the metastable γ-Fe2O3 into α-Fe2O3. We suggest the structural instability due to γ- to α-phase transformation as a mechanism for a rapid fragmentation of 20 nm particles into 3 nm ones. © 2003 American Institute of Physics.