Thin Si0.8Ge0.2 layers epitaxially grown on (100) Si substrates were oxidized at temperatures from 150 to 450 °C under vacuum ultraviolet (VUV) radiation emitted by an excimer lamp working with Xe (λ = 172 nm). The structure and composition of the grown dielectric layers were investigated by Rutherford backscattering spectrometry, nuclear reactions analysis, ellipsometry, Fourier transform infrared spectroscopy, and x-ray photoelectron spectroscopy. These investigations have shown that, during the VUV-assisted oxidation process, Ge atoms were initially rejected from the grown SiO2 layer even at temperatures as low as those employed here. After a certain quantity of Ge accumulated at the interface, nanocrystalline Ge regions were directly excised from the remaining SiGe layer becoming embedded within the advancing SiO2 layer. The layers containing these nanocrystalline Ge particles exhibited the same visible photoluminescence spectra as those recorded from layers already known to contain nanocrystalline Ge or GeO2 particles, porous Ge, or nanocrystalline Ge particles exhibiting a different crystalline structure. This seems to indicate that the shell region of the nanocrystalline particle, and not its crystalline core, is the source of the photoluminescence.