Abstract The electron distribution of the 3d filled and empty states of nickel in small particles embedded in SiO is reported. It is compared to those of bulk metal and nickel atoms present at the bulk Ni-SiO interface. The localisation of the 3d states increases with decreasing size in the range ≈ 200 to less than 100 atoms. A degeneracy removal of the 3d states giving rise to fine structures both in emission and photoabsorption spectra is evidenced in the smallest particles. An interatomic transition involving a charge transfer is seen at the bulk nickel-SiO interface but not in the small particles.