Vanadium pentoxide (V2O5) nanoparticles were synthesized by solution combustion method. The particle size reduction of the as-synthesized sample was achieved through ball milling. The as-synthesized and the ball milled samples were further characterized using XRD, TEM, EDX, UV-Visible and FTIR spectroscopy. Open-aperture z-scan technique was employed to study the nonlinear optical behavior of the synthesized samples and the commercially available V2O5 (bulk) using a second harmonic (532 nm) of Nd: YAG laser with 15 ns pulse width. We observed that the nonlinear absorption process was dependent on particle size as the synthesized and ball milled nanoparticles exhibited saturable absorption behavior while bulk V2O5 exhibited a transition to reverse saturable absorption behavior at the same incident laser intensity.