In this study, a novel approach for the formation of indium oxide (IO) nanoparticles by irradiating IO thin film using 100 MeV Ag(8+) ions has been reported. High resolution transmission electron microscopy and energy dispersive x-ray analysis confirm the presence of single-crystalline IO nanoparticles after irradiation. The electronic excitations induced by 100 MeV Ag(8+) ions followed by thermal relaxation of the energy spike in IO thin film is responsible for the formation of latent tracks in the film. The electronic energy loss (S(e)) of 100 MeV Ag(8+) ions in IO is greater than the threshold electronic energy loss (S(eth)) required for the track formation in IO film, but is less than S(eth) required for crystalline silicon. Therefore, the tracks are formed in the IO film and not in the silicon substrate. This results in a stress induced at the IO film and silicon substrate interface which is responsible for dewetting of the tracks and the formation of nanoparticles. The theoretically calculated value of nanoparticle diameter using the thermal spike model is found to be in good agreement with the experimentally observed value of 30 nm.