Core-shell nanoparticles have potential for a wide range of applications due to the tunability of their magnetic, catalytic, electronic, optical, and other physicochemical properties. A frequent drawback in the design of core-shell nanoparticles and nanocrystals is the lack of control over an extensive, disordered, and compositionally distinct interface that occurs due to the dissimilarity of structural and compositional phases of the core and shell. In this work, we demonstrate a new hydrothermal nanophase epitaxy (HNE) technique to synthesize highly structurally ordered [email protected] inverted core-shell nanoparticles (CSNs) with evidence for the nanoscale growth of corundum structure beginning from the core and extending completely into the shell of the CSNs with minimal defects at the interface. The high-resolution TEM results show a sharp interface exhibiting epitaxial atomic registry of shell atoms over highly ordered core atoms. The XPS and Co K-edge XANES analyses indicate the +2 oxidation state of cobalt is incorporated in the shell of the CSNs. Our XPS and EXAFS results are consistent with oxygen vacancy formation in order to maintain charge neutrality upon substitution of the Co2+ ion for the Cr3+ ion in the alpha-Co0.38Cr1.62O2.92 shell. Furthermore, the CSNs exhibit the magnetic exchange bias effect, which is attributed to the exchange anisotropy at the interface made possible by the nanophase epitaxial growth of the alpha-Co0.38Cr1.62O2.92 shell on the alpha-Cr2O3 core of the nanoparticles. The combination of a well-structured, sharp interface and novel nanophase characteristics is highly desirable for nanostructures having enhanced magnetic properties.