In this research, iron oxide nanoparticles were prepared using electrical arc discharge in iron salt solution with appropriate concentration and were characterized using various analyzes such as Xray diffraction (XRD), Fourier transform infrared spectroscopy (FTIR), transmission electron microscopy (TEM) and ultra violet visible (UV-Vis) spectroscopy. In addition, the capability of these nanoparticles for environmental applications was probed by measuring the photocatalytic activities in photodegradation of Rhodamine B (Rh. B) as a standard dye under UV illumination. FTIR and XRD analyzes of the obtained samples after heat treatment at 600 oC in ambient air confirmed formation of α-Fe2O3 phase. TEM images demonstrated formation semi-spherical shape nanometric particles with average diameter of 95±5 nm. UV-Vis studies exhibited an absorption edge about 370 nm which shifts to higher wavelengths by increasing the arc duration time. Photocatalytic properties of the nanoparticles obtained after heat treatment also shows the high capability of these nanoparticles in degradation of Rh. B model dye under UV illumination.