We report the synthesis of spherical core-shell structures of silicon and silicon oxide by a novel route of forced external oxidation of ball milled silicon. Structural investigations reveal the formation of a crystalline silicon core surrounded by an amorphous oxide shell, with core and shell dimensions varying approximately between 4–10 and 55–170 nm, respectively. The observations suggest partial amorphization of crystalline silicon, invasive oxygen induced passivation of dangling bonds, and formation of different types of defects in the nanocrystalline silicon/silicon oxide core-shell structure, particularly at the interfaces. No detectable photoluminescence (PL) is obtained from the as-milled silicon, but the oxidized core-shell structures exhibit strong room temperature PL, detectable with unaided eye. The peak energy of the PL spectra blueshifts with an increase in excitation energy, with the peak positions varying from 2.24 to 2.48 eV under external excitation ranging from 2.41 to 3.5 eV. The observed PL characteristics are explained in terms of dominant electronic transitions between the localized defect states and quantum confinement induced widened band states.