Nanocrystalline (4-5 nm) Ce1-xRhxO2-y mixed oxides (x = 0.03-0.21) were synthesized using water in oil microemulsion method. Morphology, microstructure and phase composition of the samples subjected to heat treatment in oxidizing and reducing atmosphere were investigated by TEM, SEM-EDS, XRD, Raman and IR spectroscopy. Samples with x <= 0.16 were structurally stable in oxidizing atmosphere up to 850 degrees C. Above this temperature the samples decomposed into Rh deficient, nanosized Ce1-xRhxO2-y and large (few mu m) Rh2O3 crystals. In hydrogen atmosphere segregation of small (1-2 nm) Rh crystallites in special epitaxial orientation Rh (1 1 1)parallel to CeO2 (1 1 1) started at 500 degrees C. The epitaxial orientation of small Rh crystallites was preserved up to 1000 degrees C indicating their strong bonding to the ceria surface. Partial substitution of Rh for Ce strongly enhanced reducibility of ceria at low temperatures (below 200 degrees C) and hindered the sintering of ceria at high temperatures. Ce(0.89)Rha(0.11)O(2-y) shows an interesting property of reversible extraction-dissolution of Rh upon reduction-oxidation cycles at 500 degrees C which is important for potential catalytic applications. (C) 2012 Elsevier Ltd. All rights reserved.