A method to prepare nano-composite phase change material was proposed and demonstrated by oxygen doping into Si2Sb2Te5 material. According to transmission electron microscope images, Si-Sb-Te-rich domains are separated from each other by SiOx-rich domains within the material. A proper dose of O-doping into Si2Sb2Te5 significantly reduces the grain size of the phase change material. Average size of Si-Sb-Te-rich domains is about 10 nm. Such separation will limit the phase-change to a relatively small volume. The reduction of grain size further results in the promotion of data retention and thermal stability of the material. Memory device based on O-doped Si2Sb2Te5 nano-composite phase change material, with a bottom electrode contact of 260 nm in diameter, was fabricated and characterized. The memory cell shows a better electrical performance compared with the Ge2Sb2Te5 based one.