Aflatoxin is a group I carcinogen and causes significant public health and food safety risks, throughout the world. This study was carried out to assess the levels of aflatoxin contamination in diseased peach (Prunus persica L.) fruit and their control using myco-synthesized iron oxide nanoparticles (Fe2O3 NPs). Diseased peach fruit were diagnosed to be infected with Aspergillus flavus. The isolated pathogen was cultured under UV light (365 nm) and exposed to ammonium hydroxide (31 %) vapors, which confirmed its ability to produce aflatoxin. For the control of this disease, Fe2O3 NPs were synthesized in the filtrate of a biocontrol fungus (Trichoderma harzianum) and characterized before analyzing their potential in disease control. FTIR spectrum described the presence of capping and reducing agents (secondary amines, alcohol, alkyne and aromatic compounds) on the surface of Fe2O3 NPs. X-ray Diffraction (XRD) described the crystalline size (7.78), while the spherical shape of Fe2O3 NPs was described by the SEM analysis. The EDX spectrum indicated the successful formation of Fe2O3 NPs by showing strong signals of iron (74.38 %). All concentrations displayed mycelial growth inhibition, in vitro and the greatest growth reduction (65.4 %) was observed at 1 mg/ml concentration of NPs. At the same concentration of Fe2O3 NPs, significant control of fruit rot of peach was also observed, in vivo. Treatment of Fe2O3 NPs maintained higher soluble solids, sucrose, total sugar, ascorbic acid, titratable acidity and firmness of peach fruit. Diseased fruit were further investigated for the presence and detection of aflatoxins. All three methods viz. thin layer chromatography (TLC), enzyme-linked immunosorbent assay (ELISA) and high-performance liquid chromatography (HPLC) confirmed a higher production of aflatoxins in control plants, while this production was significantly reduced in Fe2O3 NPs-treated peach fruit.