Effect of nanoscale confinement on the formation of Ag nanoparticles in porous matrix of nanostructured silica micro-granules has been investigated. One step rapid drying of tiny aerosol droplets has been employed for incorporation of metal precursor in the porous micro-granules. The formation of nanoparticles in the confined geometry of interstitial granular pores has been revealed by small-angle scattering and field-emission scanning electron microscopy. It has been observed that nanometric confinement accelerates the chemical reduction of precursor as compared to that in a bulk solution and the formation yield gets further enhanced by irradiation of X-ray. The growth kinetics of nanoparticles has been probed by time-resolved scattering experiments. It is revealed that X-ray-induced dissociation of bound water in the granular interstices produces hydrated electrons favouring the reduction reaction.