Pd and Ag nanocrystals of diameter 1-30 nm embedded in amorphous silica matrix have been prepared by the sol-gel process. In order to correlate the preparation route to the structural and optical properties of the materials and to obtain a deeper insight in the formation and physical properties of the clusters, a detailed structural and optical characterization have been undertaken via transmission electron and high resolution electron microscopy, X-ray diffraction, X-ray photoelectron spectroscopy, optical spectroscopy and differential scanning calorimetry. In the case of Pd and PdO, the sol-gel process has been modified by using organofunctional silanes. Thick film and uncracked bulk materials containing uniformly dispersed Pd nanocrystals are obtained by this technique after thermal treatment up to 400 degrees C. The Pd to PdO phase transformation following the annealing beyond 400 degrees C in air is also studied
