We present a detailed study of the electronic properties of CdSe nanocrystals in the absence and presence of a dielectric medium. The electronic structure of the nanocrystal is modeled within the framework of the empirical pseudopotential method. We use a real-space grid representation of the wave function, and obtain the eigenvalues and eigenstates of the one-electron Hamiltonian using a slightly modified version of the filter-diagonalization method. The band gap, density of states, charge density, multipole moments, and electronic polarizabilities are studied in detail for an isolated nanocrystal. We discuss the implications of the results for the long range electrostatic and dispersion interactions between two CdSe nanocrystals. To study the effects of the surroundings we develop a self-consistent reaction field method consistent with the empirical pseudopotential method. We use the eigenstates of the isolated nanocrystal and iterate the self-consistent equations until converged results are obtained. The results show that the electronic properties of polar CdSe nanocrystals are quite sensitive to the environment.