The dependence of the photoluminescence (PL) from SiC nanocrystals embedded in a SiO2 matrix on annealing is presented. Blue-green PL has been observed at room temperature from annealed SiC-SiO2 composite films. The intensity of the single emission band at 460 nm (2.7 eV) shows a strong dependence on the annealing temperature. The combination of high-resolution transmission electron microscopy (HRTEM), Fourier transform infrared (FTIR) transmission spectra and PL results suggest that SiC nanocrystals have been incorporated into the SiO2 matrix and O-deficient defects were formed. The origin of luminescence is attributed to the creation of defects in silicon oxide.