In this work, we studied the microstructural changes of ITO during the annealing process. ITO nanoparticles were prepared by the sol-gel method using indium tin hydroxide as the precursor. The prepared sample was investigated using TEM, powder XRD, XPS, DRIFT, and 2D correlation analysis. The O 1s XPS spectra suggested that the microstructural changes during the annealing process are closely correlated with the oxygen sites of the ITO nanoparticles. The temperature-dependent in situ DRIFT spectra suggested that In-OH in the terminal sites is firstly decomposed and, then, Sn-O-Sn is produced in the ITO nanoparticles during the thermal annealing process. Based on the 2D correlation analysis, we deduced the following sequence of events: 1483 (due to In-OH bending mode) ${ ightarrow}$ 2268, 2164 (due to In-OH stretching mode) ${ ightarrow}$ 1546 (due to overtones of Sn-O-Sn modes) ${ ightarrow}$ 1412 (due to overtones of Sn-O-Sn modes) $cm^{-1}$.