Synthesis of nanometer-sized clusters of CdS in inverse-micellar solution and in situ chemical derivatization of the surface of these cluster compounds were studied in the current paper. The nanoparticle surface can be terminated and passivated by the addition of imidazole and thiol molecules, which allows of inhibiting the particle from agglomeration, improving particle distribution in organic solvents and polymer matrices, and blocking surface defects that cause radiationless recombination of charge carriers. The solubility of these re-dispersible powders in different solvents was studied, and then the CdS quantum dots-polymer composites were prepared using solution mixing method. By means of optical, structural and thermal characterization techniques, the particle distribution and interfacial interaction in the composite systems and their influence on the properties of quantum CdS were revealed in detail. (C) 2004 Elsevier B.V. All rights reserved.