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We report on the thermally induced changes of the nano-structural and optical properties of hydrogenated nanocrystalline silicon in the temperature range 200-700 degrees C. The as-deposited sample has a high crystalline volume fraction of 53% with an average crystallite size of ~3.9 nm, where 66% of the total hydrogen is bonded as identical withSi-H monohydrides on the nano-crystallite surface. A growth in the native crystallite size and crystalline volume fraction occurs at annealing temperatures >/=400 degrees C, where hydrogen is initially removed from the crystallite grain boundaries followed by its removal from the amorphous network. The nucleation of smaller nano-crystallites at higher temperatures accounts for the enhanced porous structure and the increase in the optical band gap and average gap.