PbSe thin films grown on (111)-oriented Si substrates by molecular-beam epitaxy were annealed under an oxygen atmosphere with a variety of temperatures and times. The photoluminescence intensity from the sample annealed at 350°C for 2 h was increased by 400-fold with frontside pumping and increased by 40-fold with backside pumping, respectively, in comparison with the as-grown sample. Furthermore, the mobility was increased twofold after annealing. Such large photoluminescence increases and mobility improvements could be attributed to the surface passivation and the dislocation and defect passivation caused by oxygen diffusion and reaction with the PbSe film.