CdSe and CdTe nanoclusters were formed in aqueous solutions at moderate temperatures by a wet chemical route in the presence of thiols as effective stabilizing agents. The nature of the stabilizing agent (thioalcohols or thioacids) had an important influence on the particle size and largely determined the photoluminescence properties. The nanoclusters were characterized by means of UV-vis absorption and photoluminescence spectroscopy, powder X-ray diffraction, high resolution transmission electron microscopy, and extended X-ray absorption fine structure measurements. CdSe and CdTe nanoclusters were crystalline, in the cubic zincblende phase, with mean sizes in the range of 2 to 5 nm depending on the preparative conditions and the postpreparative size-selective fractionation, and showed pronounced electronic transitions in the absorption spectra. Thioglycerol-stabilized CdTe nanoclusters possessed sharp band-egde photoluminescence being tunable with particle size.