The novel optical and electrical properties of luminescent semiconductor nanocrystals are appealing for ultrasensitive multiplexing and multicolor applications in a variety of fields, such as biotechnology, nanoscale electronics, and opto-electronics. Luminescent CdSe and CdTe nanocrystals are archetypes for this dynamic research area and have gained interest from diverse research communities. In this review, we first describe the advances in preparation of size- and shape-controlled CdSe and CdTe semiconductor nanocrystals with the organometallic approach. This article gives particular focus to water soluble nanocrystals due to the increasing interest of using semiconductor nanocrystals for biological applications. Post-synthetic methods to obtain water solubility, the direct synthesis routes in aqueous medium, and the strategies to improve the photoluminescence efficiency in both organic and aqueous phase are discussed. The shape evolution in aqueous medium via self-organization of preformed nanoparticles is a versatile and powerful method for production of nanocrystals with different geometries, and some recent advances in this field are presented with a qualitative discussion on the mechanism. Some examples of CdSe and CdTe nanocrystals that have been applied successfully to problems in biosensing and bioimaging are introduced, which may profoundly impact biological and biomedical research. Finally we present the research on the use of luminescent semiconductor nanocrystals for construction of light emitting diodes, solar cells, and chemical sensors, which demonstrate that they are promising building blocks for next generation electronics.