In recent years considerable research work has been spent on Co nanoparticles because of their important magnetic and structural properties. In this work we are reporting the preparation and characterization of Co nanoparticles using chemical reduction techniques. Cobalt nanoparticles were prepared by employing the sodium borohydride reduction method at room temperature. The effect of Trioctylphosphine (TOPO) capping on the formation and growth mechanism of cobalt nanoparticles were investigated using powder x-ray diffraction (XRD) and vibrating sample magnetometer (VSM). The as-prepared samples were annealed in water medium at 80˚C for different time durations, it was found that there is increasing crystalline nature and change in crystal structure. Also magnetic behavior of as-prepared and annealed samples shows the significant changes in saturation magnetization, which can be useful for practical technological applications.