Maghemite nanoparticles were successfully synthesized via a co-precipitation method and electrochemical-optical properties of three different sizes were studied. Using this material as a Li-ion battery cathode, the results of charge-discharge tests showed that decreasing the maghemite particle size increased the lithium hosting capacity. First discharge capacities for cathodes made of material of particle size 11 and 19 nm were 206 and 186 mAh g -1 respectively, while for micron-sized cathode material a discharge capacity of 26 mAh g -1 was obtained. Electrochemical impedance spectroscopy (EIS) was used to derive equivalent circuit elements, which confirmed a reduction in lithium insertion resistance for material with a smaller particle size. EIS investigations disclosed that the R ct and Z W reduced with reduction of particle size, which indicates cathode material with lower particle size is more suitable. Band-gaps of the materials were determined using the diffuse reflectance spectroscopy technique on the base of Kubelka-Munk theory. The results showed that the needed energy for electron conduction reduces with reduction of particle size, which results in capacity enhancement.