By conventional pulsed laser deposition followed by in situ annealing in high vacuum, we have successfully fabricated CdS-doped glass (CDG) nanocrystalline thin films on Si substrates. Photoluminescence (PL) spectra of CDG films show an emission band at about 539 nm (2.30 eV), which is attributed to a new CdO composite formed by the interaction of the CdS nanoparticles and SiO2 in the film. The PL spectrum arising from the CdO band-band transition has a peak intensity which depends only on deposition times and not on the annealing treatment of the film. However, higher annealing temperatures yielded a greater crystalline size of CdO, as is evident from the resulting redshift of the CdO band in the PL spectra. The presence of CdO in the films was further confirmed by both energy dispersive x-ray and x-ray diffraction (XRD) measurements. Its growth in crystalline size with annealing temperature was also confirmed by analysis of the diffraction peak lines in the XRD spectra. Furthermore, XRD measurements also reveal that the crystal direction of the films was greatly determined by the annealing temperature. Finally, transmission electron microscopy pictures reveal the three different nanocrystalline structures of CDG corresponding to the different films produced with different heat treatments.