Si nanocrystals (diameter 2 – 5 nm) were formed by 35 keV Si+ implantation at a fluence of 6×1016 Si/cm2 into a 100 nm thick thermally grown SiO2 film on Si (100), followed by thermal annealing at 1100 °C for 10 min. The nanocrystals show a broad photoluminescence spectrum, peaking at 880 nm, attributed to the recombination of quantum confined excitons. Rutherford backscattering spectrometry and transmission electron microscopy show that annealing these samples in flowing O2 at 1000 °C for times up to 30 min. results in oxidation of the Si nanocrystals, first close to the SiO2 film surface and later at greater depths. Upon oxidation for 30 min. the photoluminescence peak wavelength blue-shifts by more than 200 nm. This blueshift is attributed to a quantum size effect in which a reduction of the average nanocrystal size leads to emission at shorter wavelengths. The fabrication of a laser based on SiO2 waveguides doped with Si nanocrystals seems possible, if the nanocrystal size distribution can be narrowed down into the percent range.