We report results of XAFS measurements and analysis on nanocrystalline selenium embedded in amorphous matrix. Nanocrystalline selenium samples were produced by annealing amorphous selenium powder synthesized by wet-method. From EXAFS analysis of fully crystallized selenium samples we discuss two different mode of crystallization, i.e. chain-folding and atomic rearrangement processes. In the case of crystallization by annealing EXAFS results support the chain-folding model. Amorphous/crystallites two phase model can not account for the measured EXAFS spectra of nanocrystalline systems, suggesting existence of interfacial region which has anomalously large volume between the amorphous and the crystalline phase. Curve-fitting analysis of the EXAFS spectra provided lower coordination number and larger third order cumulant than expected from the two phase model, reflecting structural characteristics of the interfacial region. Implications of these results concerning the mechanism of nanocrystallites formation in amorphous matrix are discussed. [DOI: 10.1380/ejssnt.2006.213]