Thermal growth kinetics of embedded bimetallic (AuAg/SiO2) nanoparticles are explored and compared with their monometallic (Au/SiO2 and Ag/SiO2) counterparts, as their practical applicability demands stability and uniformity. The plasmonic properties of these nanoparticles (NPs) significantly improve when their size falls in the ultra-small region (diameter < 10 nm), owing to their large active surface area. Interestingly, the bimetallic NPs exhibit better optical properties and structural stability as compared to their monometallic counterparts. This calls for a thorough understanding of the nucleation and temperature-dependent growth to ensure size stability against thermal coarsening that most bimetallic NPs completely lack. Herein, the atom beam sputtered AuAg NPs are systematically analysed over a wide range of annealing temperatures (ATs), and the results are compared with those of Au and Ag NPs. The X-ray photoelectron spectroscopy spectra and other experimental results confirm the formation of AuAg alloy NPs inside the silica matrix. Furthermore, techniques like transmission electron microscopy and grazing-incidence small-/wide-angle X-ray scattering were used to explore the temperature-dependent structural and morphological stability of the NPs. Our results show that the deposited AuAg NPs retain their spherical shape and remain as an alloy for the entire range of ATs. When the AT increases from 25 °C to 800 °C, the size of the NPs also increases from 3.5 to 4.8 nm; beyond that, their size grows substantially to 13.6 nm at 900 °C. We observed that the NPs remain in the ultra-small size range (∼5 nm) until an AT of 800 °C. Beyond that Ostwald ripening is ascribed to be the major cause of particle growth, resulting in an active surface area loss. Based on the outcomes, a three-step nucleation and growth mechanism is proposed.