Acicular α-Fe2O3 nanorods (NRs), at an intermediate stage of development, were isolated using a snapshot valve-assisted hydrothermal synthesis (HS) technique, for the purpose of complementary in situ transmission electron microscopy (iTEM) and environmental TEM (ETEM) investigations of the effect of local environment on the oriented attachment (OA) of α-Fe2O3 nanoparticles (NPs) during α-Fe2O3 NR growth. Observations of static snapshot HS samples suggested that α-Fe2O3 NPs undergo reorientation following initial attachment, consistent with an intermediate OA stage, prior to ‘envelopment’ with the developing NR to adopt a perfect single crystal. Conversely, the heating of partially developed α-Fe2O3 NRs up to 250 °C, under vacuum, during iTEM, demonstrated the progressive coalescence of loosely packed α-Fe2O3 NPs and the coarsening of α-Fe2O3 NRs, without any direct evidence for an intermediate OA stage. Direct evidence was obtained for the action of an OA mechanism prior to the consumption of α-Fe2O3 NPs at the tips of developing α-Fe2O3 NRs during ETEM investigation, under an He pressure of 5 mbar at 500 °C. However, α-Fe2O3 NPs more strongly attached to the side-walls of developing α-Fe2O3 NRs were more likely to be consumed through a local NP destabilisation and reordering process, in the absence of an OA mechanism. Hence, the emerging ETEM evidence suggests a competition between OA and diffusion processes at the α-Fe2O3 NP coalescence stage of acicular α-Fe2O3 NR crystal development, depending on whether the localised growth conditions facilitate freedom of NP movement.