Nanodiamond powder was annealed at each of the following temperatures: 300, 600, 800, 1000, and 1150℃, for an hour in flowing argon ambient. The variations of x-ray diffraction patterns and Raman spectra of the powder with different annealing temperatures were studied. While being annealed at temperatures higher than 800℃, the powder can undergo a phase-transition process from cubic diamond to graphite. In addition, the size of nanodiamond crystallites decreased from ～50 to ～25 Å. The physical mechanism responsible for the variation in Raman spectra is discussed using a phonon-confinement model.