We report on a facile method of synthesis of Cr2O3 nanoparticles by hydrothermal method. Chromium sulfate was used as a starting material whereas urea was used as a strong reducing agent. Cr2O3 nanoparticles, with rhombohedral crystal structure, have been synthesized, when the reaction solution was treated under hydrothermal condition at high pH (10). At pH = 8 amorphous Cr2O3 powders were obtained. Chromium oxide could not be synthesized in the absence of urea. Two different Raman modes have been detected for the final products synthesized at the high pH value. As-prepared Cr2O3 nanoparticles reveal agglomeration as evidenced from scanning electron microscope (SEM) images. Flake-like Cr2O3 nanoparticles, 20 to 50 nm in size, show clear lattice fringes through the high resolution transmission electron microscope (HRTEM) images. The electronic structure of the Cr2O3 nanoparticles has been studied employing x-ray photoelectron spectroscopy (XPS) and x-ray emission spectroscopy (XES) methods.