Quantum dots provide unique advantages in the design of novel optoelectronic devices owing to the ability to tune their properties as a function of size. Here we demonstrate a new technique for fabrication of quantum dots during the nucleation stage of atomic layer deposition (ALD) of PbS. Islands with sub-10 nm diameters were observed during the initial ALD cycles by transmission electron microscopy, and in situ observations of the coalescence and sublimation behavior of these islands show the possibility of further modifying the size and density of dots by annealing. The ALD process can be used to cover high-aspect-ratio nanostructures, as demonstrated by the uniform coating of a Si nanowire array with a single layer of PbS quantum dots. Photoluminescence measurements on the quantum dot/nanowire composites show a blue shift when the number of ALD cycles is decreased, suggesting a route to fabricate unique three-dimensional nanostructured devices such as solar cells.