Embedded VO 2 precipitates have been formed in single-crystal sapphire by the ion co-implantation of vanadium and oxygen and subsequent thermal annealing. The embedded VO 2 particles have been shown to exhibit an optical switching behavior that is comparable to that of continuous thin films. In this work, the mechanisms of formation of these optically active particles are investigated. It is shown that precipitation of the vanadium dioxide phase is favored when the thermal treatment is performed on an ion-damaged but still crystalline (rather than amorphized) Al 2O 3 substrate. The best optical switching behavior is observed in this case, and this behavior is apparently correlated with a more-favorable dispersion of VO 2 small particles inside the matrix.