Structural and optical properties of Ge nanocrystals in SiO2 films created by magnetron sputtering and heat treatment have been investigated. The formation of nanocrystals is found to be influenced by the temperature of heat treatment and the Ge concentration in the films. After heat treatment at 1000 °C nanocrystals are present throughout the film, with the exception of a region close to the surface that does not contain nanocrystals. This effect is assigned to oxidation of Ge in this part of the film. The size distribution of the nanocrystals is analyzed by transmission electron microscopy for a range of deposition and heat-treatment parameters. By analyzing the transmission electron microscopy images, it is possible to estimate the fraction of nanoclusters that are crystalline for a given set of growth parameters. This analysis shows that all the nanoclusters are created in the crystalline state. Raman spectroscopy is employed to probe the Ge–Ge bonds. In combination with transmission electron microscopy, this information can be used to distinguish between growth modes such as nucleation or Ostwald ripening. The photoluminescence spectra exhibit a strong broad line at 625 nm, the presence of which is demonstrated to correlate to the presence of Ge nanocrystals.