We present a study of the correlation between the magnetic phase transition and the structural distortion observed at 100 K in ε-Fe2O3. For this purpose, we have designed a novel one-pot sol-gel method assisted by glycerol, which reproducibly provides samples with a nominal 100% concentration of ε-Fe2O3 nanoparticles embedded in a SiO2 matrix. The high crystallinity of the samples and the absence of other iron oxide polymorphs has allowed us to perform, for the first time, temperature-dependent X-ray absorption fine structure spectroscopy experiments, with the aim of investigating the origin of the magnetic quenching anomaly observed at 100 K. The deformation of the structure at a local scale, where the tetrahedral and octahedral Fe sites undergo distortions of different intensities, has been simulated to fulfill the long-range order. Our results point to a local structure distortion accompanied by the magnetism quenching through a magneto-elastic coupling.