Reactive ion beam sputtering is an efficient tool to produce modifications in the surface topography in the form of periodic nanoripples with controlled modulation period and amplitude. In the present work, the atomic level processes responsible for nanoripple formation on silicon surface by oblique angle irradiation with molecular nitrogen ions have been studied. A variety of complementary techniques have been used to elucidate the structural and compositional changes occurring in the surface and sub-surface regions with irradiation fluence. It is shown that the implanted nitrogen ions react with the Si substrate to form Si3N4 phase in the subsurface region. GI-SAXS measurements suggest that the buried nitride layer gets phase separated to generate periodic variation in the density at nanometer length scale. With increasing fluence, the surface layer of Si gets sputtered out and the nitride layer reaches the surface. At this stage an unequal sputtering of nitride-rich and nitride-depleted regions results in development of surface instability which is already periodic in nature. Further irradiation results in development of well-defined surface ripples as a combined effect of composition-dependent and curvature-dependent sputtering. A direct chemical evidence for the phase separation of the nitride layer comes from the Auger electron scanning microscopy.