A biphasic solvothermal reaction method has been used for the synthesis of TiO2 nanoparticles (NPs). In this method, hydrolysis and nucleation occur at the interface of organic phase (titanium (IV) n-propoxide and stearic acid dissolved in toluene) and water phase (tert-butylamine dissolved in water) resulting in the nucleation of the stearic acid-capped TiO2 NPs. These NPs are hydrophilic due to hydrophobic stearic acid ligands and could be dispersed in toluene, but not in water. These stearic acid-capped TiO2 NPs were surface-modified with 2,3-dimercaptosuccinic acid (DMSA) in order to make them water soluble. The resultant TiO2 NPs were easily redispersed in water without any noticeable aggregation. The Rietveld profile fitting of X-ray diffraction (XRD) pattern of the TiO2 NPs revealed highly crystalline anatase structure. The average crystallite size of TiO2 NPs was calculated to be 6.89 nm, which agrees with TEM results. These results have important implications for the use of TiO2 in biomedical, environmental, and industrial applications.