Impurity atom cluster and nanocrystal formation in Er-implanted hexagonal SiC were studied using TEM and HAADF-STEM. Short interstitial loops were initially observed to form in the as-implanted layers. After annealing at 1600°C extended matrix defects (wide interstitial loops and voids), Er atom clusters and nanocrystals grew. The wide interstitial loops act as strong sinks capturing diffusing dopants that gather first in lines, then planes, and finally in three-dimensional ErSi2 nanocrystals. The unstrained nanocrystals have a hill-like shape and only two polarity-dependent orientations with respect to the matrix. One-, two-, and three-dimensional Er atom clusters were also identified. For the case of Ge implantation, again the wide interstitial loops act as sinks for the implanted Ge, representing the seeds of the nanocrystal.