α-Fe2O3 nanoparticles were synthesized through calcining the as-synthesized spindle-like β-FeOOH precursors at 600 °C. X-ray powder diffraction (XRD) and transmission electron microscopy (TEM) results showed that β-FeOOH nanospindles with a diameter of ~50 nm and lengths up to 100–150 nm were readily changed to α-Fe2O3 nanoparticles with a size of 30–150 nm after heat-treatment for 2 h. The photocatalytic performances of the as-prepared samples were evaluated by photocatalytic decolorization of methylene blue (MB) in the presence of H2O2 at ambient temperature. The results indicated that the α-Fe2O3 nanoparticles exhibited the highest photocatalytic activity compared with the β-FeOOH nanospindles and the commercial α-Fe2O3 powders. The gas-sensing measurement results demonstrated that the products showed an excellent gas response to ethanol and acetone. The results showed that these α-Fe2O3 nanoparticles may have potential applications in gas sensor and photocatalysts.