Ultrafast laser annealing of ion implanted Si has led to thermodynamically unexpected large {001} self-interstitial loops, and the failure of Ostwald ripening models for describing self-interstitial cluster growth. We have carried out molecular dynamics simulations in combination with focused experiments in order to demonstrate that at temperatures close to the melting point, self-interstitial rich Si is driven into dense liquidlike droplets that are highly mobile within the solid crystalline Si matrix. These liquid droplets grow by a coalescence mechanism and eventually transform into {001} loops through a liquid-to-solid phase transition in the nanosecond time scale.