The study is focused on formation and optical properties of nanostructures induced by laser radiation on the surface of Si1−xGex/Si hetero-structures. Formation of self-assembling nanohills induced by irradiation of nanosecond Nd:YAG laser pulses on the Si0.7Ge0.3/Si hetero-epitaxial structures is reported. The atomic force microscope study of the irradiated surface morphology has shown a start of nanohills formation after laser irradiation of the intensity I = 7.0 MW/cm2. The huge "blue shift" of photoluminescence spectra with maximum intensity in region of 700-800 nm (1.76-1.54 eV) is explained by the quantum confinement effect in the nanohills. The maximum of this photoluminescence band slightly shifts to shorter wavelengths with the increase of the intensity of laser pulses used for sample treatment. Appearance of the 300 cm−1 Ge-Ge vibration band in Raman scattering spectra for sample irradiated with I = 20.0 MW/cm2 is explained by Ge phase formation. Formation of the Ge-rich phase is explained by localization of Ge atoms drifting toward the irradiated surface under the thermal gradient due to strong absorption of laser radiation. Ellipsometric data confirm appearance of Ge-rich phase precipitates amounting to 7.1%, 6.4% of the total Ge content induced by laser radiation of intensities I1 = 20.0 MW/cm2, I2 = 7.0 MW/cm2respectively.