CdS quantum dots have been prepared by chemical method. The X-ray diffraction results indicated the formation of CdS nanoparticles with hexagonal phase and grain size 2.5 nm. The HRTEM analysis reveals the formation of CdS quantum dots with an average grain size of similar to 2.5 nm. The X-ray photoelectron spectroscopy spectra exhibit the 3d (5/2) and 3d (3/2) peaks corresponding to cadmium and the S2p (3/2) peak corresponding to sulphur. Optical studies by UV-vis spectroscopy show a blue shifted absorption at 471 nm because of the quantum confined excitonic absorption. The photoluminescence spectra of CdS exhibited a broad green emission band centred at around 494 nm.