The effect of molecular oxygen and water on the blue photoluminescence of silicon nanoparticles synthesized by anodic oxidation of silicon waters and surface functionalized with 2-methyl 2-propenoic acid methyl ester is investigated. The particles of 3 +/- 1 nm diameter and a surface composition of Si3O6(C5O2H8) exhibit room-temperature luminescence in the wavelength range 300-600 nm upon excitation with 300-400 nm light. The luminescence shows vibronic resolution and high quantum yields in toluene suspensions, while a vibronically unresolved spectrum and lower emission quantum yields are observed in aqueous suspensions. The luminescence intensity, though not the spectrum features, depends on the presence of dissolved O-2 Strikingly, the luminescence decay time on the order of 1 ns does not depend on the solvent or on the presence of O-2. To determine the mechanisms involved in these processes, time-resolved and steady-state experiments are performed. These include low-temperature luminescence, heavy atom effect, singlet molecular oxygen (102) phosphorescence detection, reaction of specific probes with O-1(2), and determination of O-2 and N-2 adsorption isotherms at 77 K. The results obtained indicate that physisorbed O-2 is capable of quenching nondiffusively the particle luminescence at room temperature. The most probable mechanism for 102 generation involves the energy transfer from an exciton singlet state to O-2 to yield an exciton triplet of low energy (<0.98 eV) and O-1(2). In aqueous solutions, excited silicon nanoparticles are able to reduce methylviologen on its surface.