Diamond cubic Sn-rich nanocrystals were fabricated with radii less than 20 nm by post-growth annealing at T=750°C of SnxGe1-x alloys grown on Ge(001) by molecular beam epitaxy. The crystal phase of the Sn-rich nanocrystals was determined to be diamond cubic from Fourier transform analysis of high-resolution transmission electron microscopy images. Optical transmittance of these SnxGe1-x/Ge (001) films demonstrated changes in optical absorption that can be attributed to absorption from the nanocrystals. The energy bandgap was measured to be 0.45 eV for nanocrystals arrays in Ge with a mean diameter of 32 nm. © Springer-Verlag 2005.