A simple sonochemical method was adopted for the synthesis of uncapped and EDTA capped CdS doped with divalent Mn ions. The effect of EDTA as a capping agent on the structural and optical properties was studies at different concentration. Increase in the concentration of EDTA helped us for the synthesis of small sized CdS:Mn nanocrystals. Information regarding structure and particle size was collected from XRD patterns were the nanocrystals showed original CdS cubic structure without any disturbance with size between 3-7 nm. Micro-structural properties in the form of grain size, micro strain, dislocation density and texture coefficient are reported. The cubical nature of these nanocrystals was further confirmed by the clear lattice fringes in the HRTEM images and SAED patterns with bright circular rings. TEM images gave the information on the effect of capping agent-EDTA, were the size was found to be 7 nm for uncapped and 3 nm for capped nanocrystals with spherical and monodispersed nature. Quantum confinement was observed from absorption spectra through blue-shift with reduction in the size of these nanocrystals. Two theoretical models on the basis of absorption spectra were adopted for the calculation of particle size and were found to be between 3-7 nm. Blue and green band emission was observed for uncapped and capped nanocrystals, which showed blue shift with the EDTA concentration in comparison to uncapped CdS:Mn nanocrystals.