The increased production of semiconductor nanomaterials such as heavy metal quantum dots and perovskites for applications such as in energy harvesting, optoelectronic devices, bioanalysis, phototherapy and consumer health products raises concerns regarding nanotoxicity. After disposal, these materials degrade upon interaction with the environment, such as rain and surface waters, soil and oxygen, and solar irradiation, leading to the release of heavy metal ions in the environment with exposure to aquatic and terrestrial animals and plants, and humans. Researchers are in the early stages of understanding the potential toxicity of such nanomaterials by quantifying the amount of heavy metal ions released due to environmental or biological transformation. Here, we evaluate the toxicity of environmentally transformed nanomaterials by considering PbS quantum dots as a model system. Using metal ion sensors and steady-state fluorescence spectroscopy, we quantify the amount of Pb2+ released by the photochemical etching of quantum dots. Furthermore, with the help of cytotoxicity and comet assays, and DNA gel electrophoresis, we evaluate the adverse effects of the released metal ions into the cultured lung epithelial (H1650), and neuronal (PC12) cells. These studies reveal higher levels of cell proliferation and DNA damage to PC12 cells, suggesting the neurotoxicity of lead due to not only the downregulation of glutathione, elevated levels of reactive oxygen and nitrogen species, and a calcium influx but also the proactivation of activator protein 1 that is correlated with protein kinase c. This research shows the significance of molecular biology studies on different cells and animals to critically understand the health and environmental costs of heavy metal-based engineered nanomaterials.