We report a novel sol-gel type chemical synthesis technique to develop monodispersed magnetic hematite (α-Fe2O3) nanoparticles. The obtained α-Fe2O3 nanoparticles have an average size of ~23 nm with a hexagonal crystal structure (space group R c) of lattice parameters a = 0.5034 nm and c = 1.374 nm. The samples were characterized with X-ray diffraction (XRD), scanning electron microscope (SEM), high resolution-transmission electron microscope (HRTEM) and vibrating sample magnetometer (VSM).