The behavior of the xenon nanoinclusions/bubbles in the uranium dioxide (UO2) matrix and their influence on its swelling were investigated through atomistic simulation techniques. The pressure in bubbles of less than 2 nm in diameter, calculated using a virial equation that takes into account the xenon/matrix interactions, is larger than the pressure calculated in simulations of the equivalent density and temperature of super critical bulk xenon. The radial distribution function of confined xenon is characteristic of a dense (*ρ* > 4 g/cm3) glassy phase. The swelling of the UO2 induced by the intragranular bubbles is proportional to the Xe/U ratio but independent of the temperature.