The synthesis of fourth-generation poly(amido-amine) (PAMAM) dendrimers having terminal groups partially or fully functionalized with thiol groups is described. These thiolated dendrimers form stable monolayers on planar Au substrates. X-ray photoelectron spectroscopy studies reveal that most of the thiol groups on dendrimers having 20% of their terminal primary amine groups functionalized can directly interact with the Au surface. This suggests that the dendrimer molecules are flexible and arrange themselves so as to maximize the number of Au/thiol interactions. Reduction of tetrachloroauric acid in the presence of thiol-modified dendrimers results in formation of water-soluble, dendrimer-stabilized nanoparticles. The particles are 1.5-2.1 nm in diameter depending on the Au/dendrimer ratio used. Stable nanoparticles can be obtained at Au/dendrimer ratios as large as 120:1.