TECHNOLOGY FOCUS - MECHANICAL ENGINEERING - Preferred Nanocrystals: The transitional metal ion dopant is selected from manganese (Mn) and copper (Cu). The host nanocrystal is selected from zinc sulfide (ZnS) and zinc selenide (ZnSe). The nanocrystals have long term stability in aqueous solutions. The nanocrystals are being characterized by: Quantum Yield of 20-40%; Size of 2.5-100 nm; Emission Stability at 0-100 degrees C; Shelf Life of at least up to 200 days in various aqueous buffer solutions; and Water Solubility of 1-100 mg/ml; pH of 4-10. The nanocrystals are in the form of powder or dispersed in aqueous solution. The nanocrystals are capable of being functionalized by biological agents. Preferred Process: Preparing nontoxic, water soluble and functionalized transition metal ion doped semiconductor nanocrystals comprises (a) synthesizing Mn doped ZnS nanocrystals by the process of our copending application no. 1473/KOL/2008; (b) coating the nanocrystals as obtained from step (a) with suitable polymer in reverse micelle; (c) dissolving polymer forming precursor monomer and cross-linker in reverse micelle followed by mixing them with hydrophobic particles as obtained from step (b); (d) adding an initiator to the nanocrystals solution as obtained from step (c) at inert or nitrogen atmosphere to initiate polymerization; (e) separating the coated particles from the mixture as obtained from step (d) by precipitating the particles from reverse micelle by adding alcohol into the system; (f) purifying the nanocrystals as obtained from step (e) in a known manner and dissolving in water or buffer solution; and (g) functionalizing the water soluble particles as obtained from step (f) with different chemical and bio-chemicals via different bioconjugation chemistry. The coating polymers are selected from polyacrylate, polyethylene glycol, primary amine, carboxylic acid derivatives and mixture of different functional groups on the surface of the nanocrystals, thus making them useful for bio-conjugation chemistry. The micelle used is Igepealcyclohexane reverse micelle. The initiator used is persulfate for initializing the polymerization. The alcohol used is ethanol. The pH of the buffer solution at which the functionalized nanocrystals are synthesized is 4-10. The pH of the buffer solution at which the functionalized nanocrystals are used for labeling is at 5-9. The different colored emissions can be achieved by doping different transition metal ions into the host nanocrystals and making them water-soluble without any loss in their emission efficiencies.