We have studied the silicon nitride (SiN) nucleation on the Si(111) 7×7 surface due to thermal nitridation with scanning tunneling microscopy (STM), and applied the resultant small SiN islands to oxidation masks in local oxidation of Si (LOCOS) process for fabrication of nanometer-scale Si structures. The nitrides appear as dark regions in STM images and the average size increases (the density decreases) with increasing nitridation temperature. When the nitrided surface is successively oxidized in the etching mode with a reaction of Si+O2→SiO↑, the nitrides turn to bright regions by selective etching of the clean 7×7 regions and the brightness (height) increases with increasing etching time. Thus, the microscopic LOCOS process is demonstrated and nanometer-scale Si pillars are fabricated.