A physical vapor deposition-based route for the fabrication of VO2 nanoparticles is demonstrated, consisting of reactive sputtering and vapor condensation at elevated pressures. The oxidation of vanadium atoms is an efficient heterogeneous nucleation method, leading to high nanoparticle throughtput. Fine control of the nanoparticle size and composition is obtained. Post growth annealing leads to crystalline VO2 nanoparticles with optimum thermocromic and plasmonic properties.