Thermal decomposition of V2O5 was studied by means of transmission electron microscopy (TEM) and electron energy-loss spectroscopy (EELS). Sample were heated in a specimen chamber of an electron microscope up to 600degreesC in vacuum at 10(-7) Torr. TEM and EELS reveal a sequence of transformations from V2O5 via VO2 to V2O3, which differs from the electron-beam-induced reduction of V2O3. The phase transformation does not proceed topotactically. Our observation reveals that the initial thermal decomposition of V2O5 to V2O3 is followed by a combination of diffusion, coalescence, and stabilization processes. Our experiments open a new way for the preparation of single-crystalline V2O3 nano-particles.