Microemulsions (MEs) are increasingly being used as nano-reactors for the formation and synthesis of nanoparticles or quantum dots (QDs). In this paper, we study the capacity of aqueous nanoreactors of AOT microemulsions for the formation of ultrasmall semiconductor QDs by fixing w = ([H2O]/[AOT]) and varying the concentration of CdS up to 100 mM. The CdS QDs in the MEs are evaluated using UV-vis spectroscopy, XRD, TEM, and light scattering. Particles are found to be controlled in 8.7 A-11.8 A. The UV-vis spectra are analysed using an accurate tight-binding (TB) approach and effective mass approximation (EMA). The TB method, being much more accurate than the EMA, gives results in good agreement with X-ray diffraction (XRD) and transmission electron microscopy (TEM). XRD reveals that the particles are mostly zinc-blend at low concentrations (> or =20 mM) but a mixture of zinc-blend and wurtzite at higher concentrations (100 mM). High concentrations of CdS are useful to improve the yield while best-utilizing nanoreactors and to give a tight control over size and polydispersity. MEs containing CdS are found to be stable over a month when kept in the dark.