In this article nano-sized CdS crystal embedded in a PEO matrix was successfully prepared by a complex transformation method that is universal for preparing nanosized compounds containing transition metals. The size of embedded CdS particles was in the nanoscale from 2 to 10 nm determined by X-ray diffusion. The nanosized CdS displayed the expected blue shift of the onset absorbance in the UV spectrum. The amount of blue shift depends upon the dipping time of the PEO-cadmium complex film in a sodium sulfide solution as well as its concentration. The most effective means for adjusting the size of CdS nanocrystals is to change the ratio of the oxygen along with the PEO chain to the cadmium ion in the complex film. The alkali salt in the film would contribute to the conductivity of the composite film.