Nanocrystals are formed over an insulating layer by depositing a semiconductor layer over the insulating layer. The semiconductor layer is annealed to form a plurality of globules from the semiconductor layer. The globules are annealed using oxygen. Semiconductor material is deposited on the plurality of globules to add semiconductor material to the globules. After depositing the semiconductor material, the globules are annealed to form the nanocrystals. The nanocrystals can then be used in a storage layer of a non-volatile memory cell, especially a split-gate non-volatile memory cell having a select gate over the nanocrystals and a control gate adjacent to the select gate.