We have studied the physical properties of Nd$_2$O$_3$ with neutron diffraction, inelastic neutron scattering, heat capacity, and magnetic susceptibility measurements. Nd$_2$O$_3$ crystallizes in a trigonal structure, with Nd$^{3+}$ ions surrounded by cages of 7 oxygen anions. The crystal field spectrum consists of four excitations spanning the energy range 3-60 meV. The refined eigenfunctions indicate XY-spins in the $ab$ plane. The Curie-Weiss temperature of $theta_{CW}=-23.7(1)$ K was determined from magnetic susceptibility measurements. Heat capacity measurements show a sharp peak at 550 mK and a broader feature centered near 1.5 K. Neutron diffraction measurements show that the 550 mK transition corresponds to long-range anti-ferromagnetic order implying a frustration index of $theta_{CW}/T_Napprox43$. These results indicate that Nd$_2$O$_3$ is a structurally and chemically simple model system for frustration caused by competing interactions with moments with predominate XY anisotropy.
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