Ion beam synthesis of Si and Ge nanocrystals in an SiO2 matrix is performed by precipitation from supersaturated solid solutions created by ion implantation. Films of SiO2 on (100) Si substrates are implanted with Si and Ge at doses 1 × 1016/cm2 - 5 × 1016/cm2. Implanted samples are subsequently annealed to induce precipitation of Si and Ge nanocrystals. Raman spectroscopy and high-resolution transmission electron microscopy indicate a correlation between visible room-temperature photoluminescence and the formation of diamond cubic nanocrystals approximately 2–5 nm in diameter in annealed samples. As-implanted but unannealed samples do not exhibit luminescence. Rutherford backscattering spectra indicate a steepening of implanted Ge profiles upon annealing. Photoluminescence spectra are correlated with annealing temperatures, and compared with theoretical predictions for various possible luminescence mechanisms, such as radiative recombination of quantum-confined excitons, as well as possible localized state luminescence related to structural defects in SiO2. Potential optoelectronic device applications are also discussed.