High purity BaTiO3 nanopowders were pressed into pellets and annealed between 100 and 1200 degrees C. The crystal quality and grain size of the BaTiO3 nanocrystals were characterized by X-ray diffraction measurements. Annealing induces an increase in the grain size from 44 to 82 nm with temperature increasing up to 1200 degrees C. XRD and Raman spectroscopy studies confirm that all the samples were single phase with a tetragonal structure after annealing at different temperatures. Positron annihilation measurements reveal large number of vacancy defects in the grain boundary region. These interfacial defects remain stable after annealing at temperatures below 400 degrees C and begin to disappear rapidly above 700 degrees C. After annealing at 1200 degrees C, most of the interfacial defects have been removed. Hysteresis loops are observed for the 100 degrees C annealed samples, which indicate ferromagnetism in BaTiO3 nanocrystals. The ferromagnetism becomes a little weaker after annealing at 700 degrees C, and it disappears after 1200 degrees C annealing. This change of ferromagnetism coincides with the defect recovery process after annealing, suggesting that ferromagnetism might originate from the interfacial defects. (C) 2011 Elsevier B. V. All rights reserved.