Polyhedral nanocrystals of <alpha>-Fe2O3 are successfully synthesized by annealing FeCl3 on silicon substrate at 1000 oC in the presence of H2 gas diluted with argon (Ar). Uniformly shaped polyhedral nanoparticles (diameter ~50-100 nm) are observed at 1000 oC and gases flow rate such as; Ar = 200 ml/min and H2 = 150 ml/min. Non-uniform shaped nanoparticles (diameter ~ 20-70 nm) are also observed at an annealing temperature of 950 oC with lower gases flow rate (Ar = 100 ml/min and H2 = 75 ml/min). Nanoparticles are characterized in detail by field-emission electron microscopy (FE-SEM), energy dispersive x-ray (EDX) and high resolution transmission electron microscopy (HRTEM) techniques. HRTEM study shows well resolved (110) fringes corresponding to <alpha>-Fe2O3, and selected area diffraction pattern (SADP) confirms the crystalline nature of <alpha>-Fe2O3 polyhedral nanoparticles. It is observed that polyhedral formation of <alpha>-Fe2O3 nano crystals depends upon annealing temperature and the surface morphology highly rely on the gas flow rate inside the reaction chamber.