CdTe nanocrystals are prepared by hydrothermal route using the reaction between Cd 2+ and KHTc in the presence of thioglycolic acid as the stabilizing agent. Hydrothermal synthesis under optimum conditions resulted in a rapid growth. CdTe nanocrystals with high PL intensity and narrow PL spectra are obtained in less time. The growth mechanism of CdTe nanocrystals is investigated. The growth rate in the initial stage of synthesis is higher in hydrothermal synthesis resulting in an increased growth in diffusion controlled focused region.