Cr2O3 nanoparticles have been prepared for precipitation technique at reaction temperature 50 °C. The prepared samples were annealed different temperatures at 500,700 and 1000 °C. Synthesized powders were characterized as X-ray diffraction, optical, transmission electron microscope, SEM with EDAX, humidity sensor, FTIR. The annealing temperature has been found to be playing a crucial role in the controlling particle size. XRD study shows the rhombohedral crystal structure of highly preferential orientation along (1 0 4) direction. FTIR reveals that the presence Cr–O bonds in the structure. The TEM images show that the size of NPs of Cr2O3 varied from 26 to 60 nm with average crystalline size 43 nm. UV–visible spectrum shows the absorption band of Cr2O3 nanoparticles at 400 nm. The humidity sensor of the Cr2O3 nanoparticles was studied by two temperature method. 1000 °C annealed Cr2O3 nanoparticles show better sensing properties and exhibits good linearity in response than 500 °C. SEM images show the clusters and agglomeration of nanoparticles. EDAX spectrum confirms the presence of Cr2O3 nanoparticles. Each samples have been characterized as sensing materials to determine relative humidity in the range of 20–90%. The humidity sensing property increased with increasing of annealing temperature and the resistance was decreased.