TiO2 nanoparticles have been prepared by sol-gel process using titanium isopropoxide as a precursor with ethanol and water as solvents. The synthesis involves gel formation, digestion for 24h, drying at 100oC for 10h, and calcination in air at 500-800oC for 2h. The resulting powder has been studied with respect to phase(s), morphology, optical absorption and photo -luminescence (PL) behaviour. The calcination of dried sol-gel product at 500oC for 2h leads to formation of anatase phase that possesses a tetragonal structure (a = 3.785 Å, c = 9.514 Å, Z = 4), average crystallite size ~ 11 nm and band gap of 3.34 eV. Further, increasing the time (t) of calcination causes crystallite growth that follows the relation d = α – β exp (-t/τ), α = 18.1 nm, β = 9.6 nm and τ = 6.9h. However, calcination of sol-gel product at 800oC for 2h gives rise to a rutile phase (tetragonal a = 4.593Å, c = 2.959Å, Z = 2), average crystallite size ~ 25 nm and band gap of 3.02 eV. The anatase phase exhibits strong PL emission peaks (excitation wavelength 405 nm) at 2.06 and 1.99 eV due to defect levels within the energy band gap. This observation has been attributed to finite size effects occurring in nanoparticles.