Nano RE oxide is prepared through the process of: selecting single RE oxide R2O3, where R is La, Ce, Pr, Nd, Sm, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu, Y and Sc, or their mixture as raw material; dissolving in water solution of nitric acid or hydrochloric acid to reach a RE ion density of 0.1-0.4 mol/L; heating to 30-80 deg.c; adding dispersant sodium dodecyl benzenesulfonate, polyoxyethylenated alcohol, SPAN-80 or Tween-80 and precipitant to form RE carbonate precipitate; filtering, drying, and heating to 700-900 deg.c to obtain single or mixed nano RE oxide. The nano RE oxide has grain size smaller than 40 nm and specific surface area of 20-40 sq m/g.