Oxidized nanocrystalline (nc) Si:H film has been produced by plasma enhanced chemical vapor deposition with a high hydrogen diluted silane and followed by thermal oxidization in a conventional furnace at a relatively low temperature of 800 degrees C. The resulting films were studied using cross-sectional transmission electron microscopy, high-resolution transmission electron microscopy and x-ray photoelectron spectroscopy. It is found that nc-Si dots embedded in an a-SiO2 matrix can be formed by the above method and some of them exhibit the columnar growth morphology. Both the nc-Si:H deposition and the later thermal treatment are revealed to contribute to the film microstructures. It is further suggested that by choosing optimum oxidation time, the size of Si nanoparticles can be well controlled.