Semiconductor nanocrystals, which have unique optical and electronic properties, have potential for applications in the emerging field of nanoelectronics. To produce nanocrystals cheaply and efficiently, biological methods of synthesis are being explored. We found that E. coli, when incubated with cadmium chloride and sodium sulfide, have the capacity to synthesize intracellular cadmium sulfide (CdS) nanocrystals. The nanocrystals are composed of a wurtzite crystal phase with a size distribution of 2-5 nm. Nanocrystal biosynthesis increased about 20-fold in E. coli cells grown to stationary phase compared to late logarithmic phase. Our results highlight how different genetic and physiological parameters can enhance the formation of nanocrystals within bacterial cells.