The biosynthesis of Q-state CdS nanoparticles by reaction of aqueous CdSO4 solution with the fungus, Fusarium oxysporum, is demonstrated. Nanoparticle formation proceeds by release of sulfate reductase enzymes by the fungus, conversion of sulfate ions to sulfide ions that subsequently react with aqueous Cd2+ ions to yield highly stable CdS nanoparticles. Elucidation of an enzymatic pathway using fungi opens up the exciting possibility of developing a rational, biosynthesis strategy for nanomaterials over a range of chemical compositions which is currently not possible.