Semiconductor quantum dots (QDs) have become promising nanoparticles for a wide variety of biomedical applications. However, the major drawback of QDs is their potential toxicity. Here, we determined possible cytotoxic effects of a set of QDs by systematic photophysical evaluation in vitro as well as in vivo. QDs were synthesized by the hydrothermal aqueous route with sizes in the range of 2.0–3.5 nm. Cytotoxic effects of QDs were studied in the human pancreatic carcinoid cell line BON. Cadmium telluride QDs with or without zinc sulfide shell and coated with 3-mercaptopropionic acid (MPA) were highly cytotoxic even at nanomolar concentrations. Capping with l-glutathione (GSH) or thioglycolic acid (TGA) reduced the cytotoxicity of cadmium telluride QDs and cadmium selenide QDs. Determination of the toxicity of QDs revealed IC₅₀ values in the micromolar range. In vivo studies showed good tolerability of CdSe QDs with ZnS shell and GSH capping. We could demonstrate that QDs with ZnS shell and GSH capping exhibit low toxicity and good tolerability in cell models and living organisms. These QDs appear to be promising candidates for biomedical applications such as drug delivery for enhanced chemotherapy or targeted delivery of light sensitive substances for photodynamic therapy.