In this paper, we have studied the evolution of quantum electronic features with the size of silicon nanoparticles embedded in an ultra-thin SiO2 layer. These nanoparticles were synthesized by ultralow energy (1 KeV) ion implantation and annealing. Their size was modified using the effect of annealing under slightly oxidizing ambient (N2+O2). Material characterization techniques including transmission electron microscopy (TEM) Fresnel imaging and spatially resolved electron energy loss spectroscopy (EELS) have been used to evaluate the effects of oxidation on structural characteristics of nanocrystal layer. Electrical transport characteristics have been measured on few (less than two hundred) nanoparticles by exploiting a nanoscale MOS capacitor as a probe. Top electrode of this nanoscale capacitor (100 nm x 100 nm) was patterned over the samples by electron-beam nanolithography. Room temperature I-V and I-t characteristics of these structures exhibit discrete current peaks which have been interpreted by quantized charging of the nanoparticles and electrostatic interaction between the trapped charges and the tunneling current. The effects of progressive oxidation on these current features have been studied and discussed.