Pure hematite nanorods and very long and thin cobalt-doped hematite nanorods (nanoneedles) were prepared by a combined precipitation and annealing method. The influence of the level of cobalt doping on different properties of hematite nanorods was investigated. Incorporation of cobalt in the form of low-spin Co3+ ions into the structure of hematite by substitution for high-spin Fe3+ ions was proved by determination of a significant unit cell contraction by powder X-ray diffraction (PXRD) and characteristic positions of the absorption edge in X-ray absorption near edge structure (XANES) spectra and peaks in X-ray emission (XES) spectra. Cobalt doping caused a gradual elongation and thinning of hematite nanorods – very long and thin 1D nanoparticles (nanoneedles) were formed in the presence of 10 and 12 mol% Co. Magnetic measurements showed a strong increase in low-temperature remanent magnetization and coercivity upon cobalt doping, as well as a disappearance of the Morin transition, which was also confirmed by Mössbauer spectroscopy. Cobalt doping significantly affected optical properties of hematite nanorods – absorption in the visible and NIR ranges increased, which was accompanied by narrowing of the optical band gap. Compared with pure hematite nanorods cobalt-doped hematite nanoneedles showed a significantly better electrocatalytic activity for the oxygen evolution reaction (OER).