An attempt has been made to prepare MgO nano-crystallites through decomposition of sol–gel derived magnesium oxalate dihydrate in air, oxygen and nitrogen ambient at 500, 600, 800, and 1000°C for 2h each and study them with regard to their phase, average crystallite size, morphology, and photoluminescence (PL) behaviour. They are shown to possess f.c.c. (NaCl-type) structure with lattice parameter a∼4.211Å, average crystallite size in the range of 3.0–73.5nm, 〈111〉 preferred orientation at decomposition temperature of 500°C (in nitrogen and oxygen ambient), and a distorted rod-like morphology. The PL peaks observed around 395 and 440nm have been assigned to ²T_1u→²A_1g and ³B_1u→¹A_g transitions associated with the relaxation of excited states of F⁺- and F₂²⁺-centres, respectively. Further, the emission band intensity is found to depend on decomposition temperature and gas ambient, crystallite size, and their morphology. However, in nitrogen ambient above 800°C, several other PL peaks observed at 491.8, 501.8, 503.5, 509.3, 561.5, and 563.0nm arise due to aggregates of F centres and/or extra energy levels created in the energy band gap by nitrogen incorporation. A mechanism for nitrogen trapping in MgO has been suggested. Further, emission intensity depends on both colour centres and surface states.