Thin films of SiO2 entrapping CdS nanocrystals were prepared by implanting Cd+ and S+ ions into a planar 100 nm thin SiO2 film structure. CdS crystallite formation was shown to be the result of the oxidation of the preformed Cd nanoparticles by energetic S+ ions. The subsequent annealing led to completing the process toward CdS and removal of unreacted Cd and S from the film and contributed to a narrowing in particle size distribution. CdS nanocrystals obtained are of hexagonal structure and nearly spherically shaped with an average size of 7 nm.