The results of the experimental studies of the effect of nanoislands on the lateral photoconductivity in structures with Ge nanoislands formed on the SiOx layer using molecular beam epitaxy are reported. It is shown that nanoislands increase the surface recombination rate and affect the fundamental absorption edge of c-Si. The generation of lateral photocurrent in the range 0.8 – 1.0 eV was observed due to transitions between tails in the density of states of the near-surface c-Si, which is described by Urbach dependence. It was shown that the absorption spectrum of nanoislands is typical for the disordered Ge and is due to transitions between density-of-states tails of the valence and conductance bands. The mechanism is proposed of lateral photoconductivity involving the non-equilibrium charge carriers, generated in Ge nanoislands. It is suggested that the optical absorption and lateral photocurrent in Ge-SiOx-Si structures are affected by fluctuations of the surface potential in the near-surface region of c-Si, fluctuations of the Si band gap width and by effects of disorder in Ge nanoislands.