The paper reports quantum confinement of PbSe nanocrystals (NCs) embedded in a ZnSe matrix by rapid thermal annealing of PbSe/ZnSe multiple quantum wells. The distribution of the PbSe NCs within the ZnSe matrix was observed by transmission electron microscopy and the average crystalline size of PbSe NCs was found to be 3-5 nm. The cumulative disorder and the absence of long range super-structure order due to quantum well intermixing were inferred from small angle X-ray scattering. The blue shifts in the absorption edge and band edge luminescence emission indicate formation of PbSe NCs. Finally, potential applications in solar cells are discussed. (C) 2013 Elsevier Ltd. All rights reserved.