Nanopowder of iron cyanide hydrate (member of Prussian blue family) was obtained using ferric chloride and potassium cyanide in their dilute solution through co-precipitation method. The effect of thermal annealing on iron cyanide hydrate nanocrystallites have been studied in detail. The formation of Fe4[Fe(CN)6]3·14H2O and iron oxides was revealed by the Fourier transform infrared spectroscopy. The crystal structure, morphology and size of nanocrystallites were investigated by X-ray diffraction and transmission electron microscope. Results suggest that using co-precipitation technique, nanopowder of iron cyanide hydrate, in typically spherical shape, can be obtained and their thermal treatment also yield iron oxide nanocrystallites of spherical with good homogeneity. The size of the prepared nanocrystallites was found in the range 20-36 nm. It was observed that thermal treatment, typically at 800• C (4 h), iron cyanide hydrate (Fe4[Fe(CN)6]3·14H2O) nanocrystallites transformed into iron oxide (α-Fe2O3, hematite) nanocrystallites.