Internal structures of extraordinarily luminescent semiconductor nanoparticles are probed with photoelectron spectroscopy, establishing a gradient alloy structure as an essential ingredient for the observed phenomenon. Comparative photoluminescence lifetime measurements provide direct evidence for a minimization of nonradiative decay channels because of the removal of interfacial defects due to a progressive change in the lattice parameters in such graded structures, exhibiting a nearly single-exponential decay. Quantum mechanical calculations suggest a differential extent of spatial collapse of the electron and the hole wave functions in a way that helps to enhance the photoluminescence efficiency, while at the same time increasing the lifetime of the excited state, as observed in the experiments.