The CdTe nanocrystals were successfully synthesized using a facile room temperature method with non-toxic and environmentally friendly capping agent. The obtained CdTe nanocrystals were characterized by UV–Vis absorption spectroscopy, transmission electron microscopy, and z-scan technique. A photoluminescence peak with full width at half maximum of around 15 nm could be obtained, which indicates a homogeneous and narrow size distribution for the CdTe nanocrystals. The magnitude and sign of the third-order nonlinear refractive index (n2) and nonlinear absorption coefficient (β) of the CdTe nanocrystals were determined by using of the closed- and open-aperture z-scan at different intensities, respectively. The negative sign of n2 indicated that there is a self-defocusing effect in the sample. The nonlinear refractive index, n2, and the nonlinear absorption coefficient, β, were in order of 10−7 cm2W−1 and 10−2–10−3 cmW−1, respectively.