In accordance with this invention is provided a process for the synthesis of capped nanocrystalline g - Fe2O3 comprising preparing a solution of a salt of iron in an organic diol and slowly raising the temperature to 130 – 2200C followed by removal of all nitrous fumes and water vapour. The solution is then refluxed for a predetermined period of time followed by cooling to room temperature and precipitation of the nanocrystalline g - Fe2O3 by an alcohol. The organic diol used may be selected from 1,4-butanediol and 1,5-pentanedio.