Hydrophobic inorganic nanocrystals have been transferred from organic solvent to aqueous solution through a robust and general ligand exchange procedure. Polyelectrolytes such as poly(acrylic acid) and poly(allylamine) are used to replace the original hydrophobic ligands on the surface of nanocrystals at an elevated temperature in a glycol solvent and eventually render the nanocrystals highly water soluble. The physical properties of the nanocrystals, such as superparamagnetism, photocatalytic activity, and photoluminescence, are maintained or improved after ligand exchange.