We report on the ion-induced anisotropic deformation in nickel oxide nanoparticles prepared by conventional sol-gel technique. Colloidal-like NiO nanoparticles with an average diameter of about 40–50 nm embedded in a SiO2 layer change their shape dramatically under swift heavy ion irradiation with 32 MeV Cu+5 ions at room temperature and normal incidence. Transmission electron microscopy analysis show irradiation induced shape transformation from nearly spherical nanoparticles into oblate nanorods at a rate that increases with ion fluence. For low nanoparticle density, the apparent nanoparticle size aspect ratio increases gradually with increasing irradiation fluence to 5 × 1014 ions cm–2 while no significant volume change is observed upon irradiation. For higher density of the nanoparticles, Rutherford backscattering spectrometry analysis indicates collective growth of nanoparticles under irradiation with fluence above 5 × 1014 ions cm–2. Magnetization experiments of the NiO nanoparticles show that the film consisting the pristine NiO nanoaprticles has a small magnetic anisotropy with axis in the direction parallel to ion beam. However, after 32 MeV Cu+5 ion irradiation, the change in magnetic anisotropy is much larger, which can be correlated with the elongation of nanoparticles in the beam direction. Furthermore, a threshold fluence, under which no deformation takes place is observed.