We have studied the physical properties of Nd2O3 with neutron diffraction, inelastic neutron scattering, heat capacity, and magnetic susceptibility measurements. Nd2O3 crystallizes in a trigonal structure, with Nd 3+ ions surrounded by cages of 7 oxygen anions. The crystal field spectrum consists of four excitations spanning the energy range 3-60 meV. The refined eigenfunctions indicate XY-spins in the ab plane. The Curie-Weiss temperature of θCW = −23.7(1) K was determined from magnetic susceptibility measurements. Heat capacity measurements show a sharp peak at 550 mK and a broader feature centered near 1.5 K. Neutron diffraction measurements show that the 550 mK transition corresponds to long-range anti-ferromagnetic order implying a frustration index of θCW /TN ≈ 43. These results indicate that Nd2O3 is a structurally and chemically simple model system for frustration caused by competing interactions with moments with predominate XY anisotropy.