X-ray photoelectron spectroscopy (XPS) has been used to characterize the Si nanocrystals (nc-Si) incorporated in SiO2 by ion implantation and subsequent thermal annealing. XPS results suggest that the as-implanted films contain a composition of a few suboxide SiOx (x<2). The dependence of XPS spectra on annealing temperature show that these suboxides decompose into SiO2 and Si nanocrystals. Due to the implanted Si+ depth profile, thermal annealing will lead to the formation of nc-Si with different sizes corresponding to the depth. Si0 peak shifts arising from the size effect of nc-Si can be clearly observed. Photo-induced charge effect from the nc-Si has been studied in this work. The potential wells induced by nc-Si in the SiO2 band gap substantially enhance the charging effect, which causes a significant shift in Si0 and C1s core levels.