Question: Was C# compiler written in C++?

Answer: 
Yes, but there are plans to write a C# compiler in C#, which I believe was discussed in [this podcast](http://deepfriedbytes.com/podcast/episode-27-present-and-future-of-the-csharp-language/).
There is a new (as of late 2011) C# and VB compiler written by Microsoft called [Roslyn](http://en.wikipedia.org/wiki/Microsoft_Roslyn) which is written in C# and VB.NET respectively. Project page is [here](http://msdn.microsoft.com/en-us/roslyn). The Roslyn compiler is written as a library that exposes a rich public API. There is a news article [here](http://www.infoworld.com/d/application-development/microsofts-roslyn-reinventing-the-compiler-we-know-it-176671) about it from InfoWorld.

UPDATE:
As of April 3, 2014, Roslyn is open source under the Apache License 2.0.