AbstractPhotoluminescence quantum yield (PL QY) of colloidal quantum dots (QDs) can be improved by growing a shell, but it is rather limited if the shell thickness exceeds a threshold. Lattice mismatch between the core and shell is known to determine this critical shell thickness, securing QDs from defect formation through strain release. However, it cannot explain the recently reported high efficiency QDs with giant shells. Based on CdSe/ZnSe thick shell QDs, this study aims to identify the culprit limiting PL QY. In the shell growth process, the gradual reduction in PL QY is accompanied by a low‐energy tail emission, but the additional compressive strain by the outmost shell eliminates such abnormalities. It is revealed that the zinc vacancy in the shell provides shallow hole trap states. The computational study successfully explains the hole‐accepting zinc vacancy states above the CdSe 1Shh state, raised by compressive strain along radial direction. Additional hydrostatic compressive strain lifts the 1Shh state for this strained heterostructure to minimize the energetic gap with the zinc vacancy states. The finding suggests that critical shell thickness can be limited by atomic vacancy incorporated during shell growth, not by formation of misfit dislocation caused by strain release.