Thiol-capped CdTe nanocrystals with cubic zinc blende structure are synthesized in aqueous solution. Their steady-state and time-resolved luminescence characteristics are studied at room and liquid nitrogen temperatures. A strong exciton luminescence peak at 2.3 eV dominates the emission spectrum of CdTe nanocrystals at room temperature, whereas the trap band centered at 2.0 eV undergoes substantial temperature quenching. Luminescence excitation spectra reveal different channels leading to radiative recombination via either excitons or traps. The mean luminescence decay time of CdTe nanocrystals at room temperature decreases from 120 ns at 1.94 eV to 20 ns at 2.43 eV. Luminescence:decay kinetics of CdTe nanocrystals are strongly nonexponential and are described by extremely bread lifetime distributions lying within the range from a few hundred picoseconds to a few hundred nanoseconds.