MgO is a widely used material in ceramic and electronic industry. It is a well known insulator which has been used as a spacer layer in electronic circuits and magnetic tunnel junctions. We report room temperature ferromagnetism in undoped, and V doped MgO nanoparticles of the same size (∼ 39 nm diameter) produced by a two-step chemical process, but containing nominal 0.5, 0.7, 0.9, 1, 1.1, and 1.5 at.% V. Strikingly, the saturation magnetization shows an anomalous abrupt increase in its value to 80.2 memu/g for the 1 at% V doped nanoparticles. Also, high resolution TEM studies show that on doping with V the lattice parameters, d111 in particular, increases from 2.42 Å [MgO] to 2.47 Å in the case of [MgO:V(1%)]. These results are consistent with recent theoretical predictions on a first principles basis which suggests that the observed ferromagnetism is sensitively dependent on the distance between the V Mg – V Mg. Vacancies.