Semiconductor nanoparticles are currently being extensively studied due to their unique size dependent properties. It has been demonstrated by several groups that nanocrystalline II-VI semiconductors show enhanced luminescence, increased oscillator strength and shorter response time. Polymers are able to achieve surface passivation, prevent particles from agglomeration, which are in favour of controlling the particles size and size distribution effectively. CdTe is an important II-VI semiconductor material, which is very useful for a variety of electro-optical devices and solar energy conversion. Fe3+ doped PVA capped CdTe nanoparticles were prepared by co-precipitation method and characterized by luminescent techniques. PL studies of Fe3+ doped PVA capped CdTe nanoparticles exhibit blue emission band. CIE chromaticity coordinates were also calculated from emission spectrum of Fe3+ doped PVA capped CdTe nanoparticles.