Energy shifts in the Si 2p levels of the five Si oxidation states Sin+ (n = 0, 1, 2, 3, 4) in the system of Si nanocrystals embedded in SiO2 matrix have been determined. The thermal annealing effect on the energy shifts has been studied. The result suggests that the Si nanocrystals and the SiO2 are thermally stable but the annealing can cause some structural deformations such as changes in the bond lengths and bond angles for the suboxides Si2O and SiO. The energy shifts generally show a linear dependence on the oxidation state n, suggesting that the energy shifts could be mainly determined by the nearest-neighbor oxygen atoms. It is shown that the chemical structures of the system are similar to those of the conventional SiO2/Si system in terms of the energy shifts.