This article describes the formation of CdS nanoparticles from aqueous solution where the growth process was controlled with thiols and monitored by means of stroboscopic stopped flow spectrometry. Several unique properties of semiconductor nanoparticles have been evaluated in solution, and the third order optical nonlinearity and the photoinduced electron transfer reaction kinetics on CdS nanoparticles are shortly mentioned in the present report. Analysis of optical absorption spectrum and the finite depth quantum well model will be described for the estimation of size effect on the excitation energy of semiconductor nanoparticles.