A method of synthesizing functional nanostructured powders through reactive thermal plasma processing has been developed. The synthesis of nanosized titanium oxide powders was performed by the oxidation of solid and liquid precursors. Quench gases, either injected from the shoulder of the reactor or injected counter to the plasma plume from the bottom of the reactor, were used to vary the quench rate, and therefore the particle size, of the resultant powders. The experimental results are well supported by numerical analysis on the effects of the quench gas on the flow pattern and temperature field of the thermal plasma as well as on the trajectory and temperature history of the particles. The plasma-synthesized TiO2 nanoparticles showed phase preferences different from those synthesized by conventional wet-chemical processes. Nanosized particles of high crystallinity and nonequilibrium chemical composition were formed in one step via reactive thermal plasma processing.