Sn-based nanocrystals were prepared by depositing Sn-rich SiO2 films using a cosputtering process and a subsequent vacuum annealing. Transmission electron microscopy (TEM) and x-ray diffraction showed formation of Sn nanocrystals evenly distributed in SiO2 matrix at relatively low annealing temperature of 400°C. The size of Sn nanocrystals increased with increasing annealing temperature. X-ray photoelectron spectroscopy revealed that Sn was partially oxidized during the cosputtering process forming Sn oxide nanoclusters of 3.4±0.6nm in diameter after annealing, as observed by TEM. The Sn-based nanocrystal films exhibited wide optical bandgap around 4.2–4.4eV and a slightly high-energy shift with increasing annealing temperature. This result is in close agreement with the absorption in the Sn oxide nanoclusters as well as Sn-related oxygen defects in the matrix.