In this report, we have evolved a new method to synthesize nanocrystalline calcium sulfate dihydrate (gypsum) via electrochemical oxidation. This method provides a facile, direct way of synthesizing nanocrystalline gypsum at room temperature. Field-emission scanning electron microscopy micrographs present an interesting phenomenon of formation of microcracks in the nano-CaFeO2.5 pellet during electrochemical oxidation leading to nucleation of gypsum within the cracks. A known theoretical model has been invoked to explain the gypsum growth within the cracks. Transmission electron microscopy studies indicate electron beam-induced phase transformation of single-crystalline calcium sulfate dihydrate to polycrystalline CaO nanoparticles. The hardness was found to be improved (63% higher) by the addition of a mere 5 wt % of nano-gypsum to commercial gypsum, which is almost 200% higher than nano-gypsum synthesized earlier via an indirect route of flame synthesis and hydration. Moreover, the compressive strength of the gypsum mixture (with 5 wt % of nano-gypsum) was found to be improved by a factor of 1.7 (92.05 MPa), in comparison to commercial gypsum (54.23 MPa). The improved hardness and compressive strength by reduction in particle size of gypsum are noteworthy. © 2016 American Chemical Society.