Samples of CdS doped silica thin films have been prepared with weight concentrations ranging from 0.5 to 20% (CdO/SiO2). Nanocrystal structure and size distribution are determined by Transmission Electron Microscopy (TEM) and image analysis. The mean size is the same for all concentrations (4 nm) and is related to the matrix porosity. The linear absorption shows characteristic features of the excitonic level and the gap blue shift due to the quantum confinement. Non-linear optical properties are studied by Degenerate Four Waves Mixing (DFWM) to measure the third order susceptibility χ(3)which is high (typically 10−7esu) and depends linearly of the volume fraction of the semiconductor particles.