Quantum dots (QDs) have been the subject of considerable study in theoretical physics, and water soluble QDs now appear to have numerous applications in biological tagging, molecular electronic devices, and nanoscale engineering. The work reported here supports the notion that the aliphatic chains of the trioctylphosphine oxide molecules decorating these (CdSe)ZnS core-shell QDs are stabilized by the hydrophobic cyclodextrin (CD) lumen. Photoluminescence studies show a redshift of over 15 nm in the emission wavelength of the QDs upon complexation with the CD, and first-principles calculations reveal an exothermic exchange of the S in the ZnS shell with the CD hydroxyl oxygen. Unlike simple water-driven surface transformations, the directed bonding of hydroxyl groups to the ZnS shell results in stable structures, verified by photoluminescence and Fourier transform infrared spectroscopy. (C) 2005 American Institute of Physics.