A method of synthesis of Cr3+:MgAl2O4 nanocrystalline powders is presented. Their morphology and structure were characterized by XRD and TEM methods. The sizes of nanocrystals were controlled by temperature annealing process. The size effect of nanocrystals on optical properties of Cr3+:MgAl2O4 was investigated. Following the luminescence, excitation and lifetime measurements, it was found that the optical properties of Cr3+:MgAl2O4 nanocrystals were significantly dependent on their size.