We report the preparation of a rhombohedral phase (space group $R\bar{3}c$) AlFeO3 nanoparticles (NPs) and its magnetic and ferroelectric properties. The high purity rhombohedral phase AFO NPs of an average size 50 nm were prepared by sol – gel route followed by annealing at 700 °C. The NPs show antiferromagnetic nature at room temperature and near room temperature, weak ferroelectric properties. The coexistence of magnetic and ferroelectric features indicate that AFO NPs can be used as a prospective lead free multiferroic material for the spintronics applications.