A novel method for the synthesis of highly monodispersed hydrophillic InP-ZnS nanocrystals and their use as luminescence probes for live cell imaging is reported. Hydrophobic InP-ZnS nanocrystals are prepared by a new method that yields high-quality, luminescent core-shell nanocrystals within 6-8 h of total reaction time. Then by carefully manipulating the surface of these passivated nanocrystals, aqueous dispersions of folate-conjugated nanocrystals (folate-QDs) with high photostability are prepared. By use of confocal microscopy, we demonstrate the receptor-mediated delivery of folic acid conjugated quantum dots into folate-receptor-positive cell lines such as KB cells. These folate-QDs tend to accumulate in multi-vescicular bodies of KB cells after 6 h of incubation. Receptor-mediated delivery was confirmed by comparison with the uptake of these particles in folate-receptor-negative cell lines such as A549. Efficient two-photon excitation of these particles and two-photon imaging using these particles are also demonstrated. The use of these InP-ZnS nanoparticles and their efficient two-photon excitation can be potentially useful for deep tissue imaging for future in vivo studies.