A large coercive field, HC=20 kOe, is obtained at room temperature in V-Fe2O3 nanoparticles embedded in a silica matrix, produced by sol-gel chemistry. The combination of a relatively high magnetic anisotropy together with the small saturation magnetization are responsible for this large HC. Upon cooling, a strong reduction of HC is observed at T~100 K, which is accompanied by a drastic reduction of the squareness ratio MR/MS. Neutron-diffraction measurements reveal the existence of a low-temperature magnetic transition to which the softening of this material can be ascribed.