We report one-pot hydrothermal synthesis of nearly mono-disperse 3-mercaptopropionic acid capped water-soluble cadmium telluride (CdTe) quantum dots (QDs) using an air stable Te source. The optical and electrical characteristics were also studied here. It was shown that the hydrothermal synthesis could be tuned to synthesize nano structures of uniform size close to nanometers. The emissions of the CdTe QDs thus synthesized were in the range of 500-700 nm by varying the duration of synthesis. The full width at half maximum (FWHM) of the emission peaks is relatively narrow (40-90 nm), which indicates a nearly uniform distribution of QD size. The structural and optical properties of the QDs were characterized by transmission electron microscopy (TEM), photoluminescence (PL) and Ultraviolet-visible (UV-Vis) spectroscopy. The photoluminescence quenching of CdTe QDs in the presence of L-cysteine and DNA confirms its biocompatibility and its utility for biosensing applications. The room temperature current-voltage characteristics of QD film on ITO coated glass substrate show an electrically induced switching between states with high and low conductivities. The phenomenon is explained on the basis of charge confinement in quantum dots. (C) 2011 Elsevier B.V. All rights reserved.