Si nanoclusters with average size of a few nanometers have been synthesized by thermal vaporization of Si in an Ar buffer gas, and passivated with oxygen or atomic hydrogen. High resolution transmission electron microscopy (HRTEM) and X-ray diffraction (XRD) revealed that these nanoclusters were crystalline. All samples showed strong infrared and/or visible photoluminescence (PL) with varying decay times from nanoseconds to microseconds depending on synthesis conditions. Absorption mainly in the Si cores was observed by photoluminescence excitation (PLE) spectroscopy. The visible components of PL spectra were noted to blue shift and broaden as the size of the Si nanocrystals (nc-Si) was reduced, and there were differences in PL spectra for hydrogen and oxygen passivated nc-Si. Our data can be explained best by a model involving absorption between quantum confined states in the Si cores and emission by surface/interface states.