A simple hydrothermal process for fabrication of hematite (α-Fe2O3) nanostructures with narrow size distribution was developed by using PVP as surfactant and NaAc as precipitation agent. The influence of experimental parameters including the concentration of the precursor, precipitation agent, stabilizing agent, and reaction time was systematically investigated to study the possible formation mechanism of α-Fe2O3. Finally, the electrochemical properties of the obtained hematite particles were studied using cyclic voltammetry and galvanostatic charge–discharge measurement by a three-electrode system. The results reveal that their specific capacitances are related to their sizes. By virtue of large surface area, the as-prepared hematite nanoparticles can present the highest capacitance (340.5 F·g–1) and an excellent long cycle life within the operated voltage window (−0.1 to 0.44 V), demonstrating that the as-prepared hematite nanoparticles can serve as one of the most excellent electrode materials for supercapacitors.