The Cerium oxide (CeO2) nanoparticles with different particle sizes were successfully synthesized by hydrothermal method with different reaction time. The synthesized CeO2 nanoparticles were characterized by Powder X-Ray diffraction (XRD), Scanning Electron Microscopy (SEM), High Resolution Scanning Electron Microscopy (HRSEM), UV-Vis spectroscopy and FTIR spectroscopy. The effects of the particle size on the structural properties of the prepared samples were investigated usingXRD, SEM and HRSEM. The better optical properties exhibited by CeO2 having smaller particle size has been revealed by UV-Visible study. The Photo-catalytic study showed that the lower particle size CeO2 nanoparticles have higher Photo-catalytic activity for degradation of Methylene Blue. The optical properties of CeO2 nanoparticles improve with reduction in the particle size