Porous iron oxide (α-Fe2O3) nanoparticles were synthesized by the microwave combustion method (MCM) using urea as the fuel. For the purpose of comparison, it was also prepared using the conventional combustion method (CCM). The as-synthesized porous α-Fe2O 3 nanoparticles were characterized by X-ray powder diffraction (XRD), high resolution scanning electron microscopy (HR-SEM), high resolution transmission electron microscopy (HR-TEM), energy dispersive X-ray analysis (EDX), diffuse reflectance spectroscopy (DRS), Brunauer-Emmett-Teller (BET) analysis and vibrating sample magnetometer (VSM) analysis. The XRD results confirmed the formation of rhombohedral α-Fe2O3 phase. The formation of α-Fe2O3 nanoparticles was confirmed by HR-SEM and HR-TEM, and their possible formation mechanisms were also proposed. The optical absorption and the band gap were determined by DRS spectra. The surface area was derived from the nitrogen adsorption-desorption isotherms using BET analysis. The magnetic properties of the synthesized α-Fe2O3 were investigated with vibrating sample magnetometer (VSM) and their hysteresis loops were obtained. Both the prepared samples show ferromagnetic behavior with hysteresis curve at room temperature. The relatively high saturation magnetization (65.23 emu/g) of α-Fe 2O3-MCM suggests that this method is suitable for preparing high-quality nanocrystalline magnetic α-Fe2O 3 for practical applications. Copyright © 2013 American Scientific Publishers.