Abstract: GaAs-SiO₂ composite films are prepared by co-sputtering technique using a GaAs-SiO₂ composite target. Composite films with different GaAs crystallite size and volume fraction can be obtained by adjusting the substrate temperature and the area ratio of GaAs at the surface of the composite target. From the results of XRD, TEM and XPS analyses, it is confirmed that the GaAs nanocrystallites with certain crystallite size are dispersed homogenerously in the a-SiO₂ matrix in our composite films. Absorption spectra show discrete electron levels as well as the blue shift of the absorption edge induced by the quantum confinement effect which becomes larger with the decrease of the particle size.