Magnesium aluminate (MgAl2O4) spinel nanoparticles with an average crystalline size of 35 nm were synthesized by polymer-gel and isolation-medium-assisted calcination. In the process, a large excess of MgO, 40 times the stoichiometric amount of spinel, is added to the precursor mixture to separate the spinel particles as they are nucleated to prevent their agglomeration and coarsening during calcination. Well-dispersed MgAl2O4 nanoparticles with a single-crystal structure were obtained after acid washing of calcined product. The microstructures of the as-prepared samples were characterized by differential thermal and thermogravimetric analysis, x-ray diffractometry, Fourier transform infrared spectroscopy, nitrogen adsorption–desorption isotherms, scanning electron microscopy, energy-dispersive x-ray spectroscopy, and transmission electron microscopy. The results indicate that MgO acting as the isolation medium is effective in preventing the agglomeration of MgAl2O4 nanoparticles, and it also prevents their contamination by introducing an isolation medium during the preparation process. The nanopowder was sintered up to 95% of the theoretical density but with parallel grain growth.