In this study, influence of nanoparticles size on optical and dielectric properties of TiO2 nanoparticles is investigated through thermal treatment of hydrous amorphous titania synthesized by chemical precipitation method at temperatures 300 °C and 600 °C. The average sizes of nanoparticles estimated respectively are ~ 8 nm and ~ 22 nm. Although the optical bandgap energy of both samples remains the same the Eg Raman mode observed at 144 cm-1 for bulk TiO2 is shifted to 150 cm-1 only for nanoparticles calcined at 300 °C. The shift is ascribed to the size as well as higher density of surface defects. Moreover, the presence of surface defects like oxygen vacancies which provide effective sites for catalytic reaction are confirmed by EPR and photoluminescence studies. The oxygen vacancies enhances space charge polarization and consequently results in higher dielectric constant. In addition, the peak shift of loss tangent which determines the mobility of charge carriers is found to be size dependent. Hence calcination temperature has significant influence on defect levels which in turn determine the optical and dielectric properties of TiO2 nanoparticles.