This work has been focused on the synthesis of the raw materials iron oxide nanoparticles; hematite (α -Fe₂O₃)   from Iron (II) chloride tetra hydrate (FeCl₂-4H₂O) and iron (III) chloride hexahydrate (FeCl₃-6H₂O) using Solid State Chemical Reaction technique. Nanostructure powders were characterized by X-ray diffraction (XRD), scanning electron microscope (SEM), energy dispersive X-ray spectroscopy (EDX), and UV-visible spectroscopy. XRD confirmed the formation of crystalline α -Fe₂O₃ nanostructured andits average crystallite size increased from ~ 12 to 28 nm with increasing annealing temperature from 200 up to 80℃ while SEM confirmed the morphology and the purity of the sample was evaluated from the energy dispersive spectrum (EDS). Moreover, strain decreased with increasing annealing temperature. UV-visible characterization indicated the existence of both direct and indirect band gap in the samples. All The annealed samples showed the direct band gap at ~ 2.21 eV. However, the indirect band gap increased from 1.6 to 1.94 eV when the annealing temperature increased from 200 up to 700℃ and remained almost the same for sample annealed at 800℃. The observed values of optical band gaps were in close agreement with the reported values. Our results indicated that the annealing would give rise to a good crystalline α -Fe₂O₃ nanoparticles with reduced strain.