This paper reports a mechanistic study of photoluminescence (PL) quenching of cetyl trimethyl ammonium bromide (CTAB) stabilized ZnS nanoparticles (NPs) on surface modification with beta-cyclodextrin (beta-CD). The surface functionalization of NPs has been achieved due to the formation of inclusion complex between beta-CD and hydrophobic tail of CTAB. It has been observed that quenching takes place in the PL intensities of NPs on the addition of beta-CD. Therefore, an attempt has been made to understand mechanism for these quenching phenomena. The detailed studies reveal that the beta-CD causes PL quenching due to the electron transfer between NPs and beta-CD and aggregation of NPs.