The effect of plasma-striking atmosphere: air and air+Ar-gas on the crystallization of Fe-oxide phases was studied using dc thermal arc-plasma processing route. The powders were characterized by x-ray diffraction, vibrating sample magnetometry, transmission electron microscopy, and Mössbauer spectroscopy techniques. At room temperature and O₂ rich atmosphere, arc-evaporated Fe²⁺ ions oxidize into either g-Fe₂O₃ or Fe₃O₄ depending upon the combining ratio of Fe with molecular O₂. Fe/O ratio could be adjusted using proper flow rate of Ar gas to crystallize the pure γ -Fe₂O₃.