Nanocrystals of 20 mol % Gd3+-doped CeO2 dispersible in basic aqueous solutions were grown via hydrothermal treatment of anionic Ce(IV) and Gd(III) carbonate complexes at 125-150 degrees C for 6-24 h with N(CH3)(4)(+) as a capping agent. The nanocrystals were characterized in detail using dynamic light scattering (DLS), zeta-potential measurements, X-ray diffraction (XRD), specific surface area measurements based on the Brunauer-Emmett-Teller theory (SSA(BET)), transmission electron microscopy (TEM), energy dispersive X-ray spectroscopy, and Raman spectroscopy. DLS analysis revealed that the highly transparent product solution consisted of nanocrystals approximately 10-20 run of hydrodynamic diameter with a very narrow size distribution, while the zeta-potential analysis results strongly suggested that the N(CH3)(4)(+) capped negatively charged sites on the nanocrystals' surface and provided sufficient repulsive steric effect to prevent agglomeration. Moreover, the crystallite size (d(XRD)) estimated from the XRD patterns and the equivalent particle size (d(BET)) estimated from the SSA(BET) data were in the range between 5-6 and 4-4.5 nm, respectively, and nearly constant independent of reaction time, indicating suppressed Ostwald ripening due to capping. Good agreement between the values obtained from the d(XRD) and d(BET) analyses with the size of the primary nanocrystals observed in the TEM image also confirmed that the primary nanocrystals were single crystals and nearly free from aggregation. Furthermore, the gadolinium content in the as-prepared nanocrystals was determined to be very close to 20 mol % and remained unchanged after HCl treatment, indicating successful doping of stoichiometric amount of Gd3+ into CeO2 lattices. Finally, the Raman analysis suggested that only a slightly Gd3+-rich phase was present in the nanocrystals grown for shorter reaction times. By increasing the reaction time, even at 125 degrees C, the Gd3+ was homogeneously distributed into the CeO2 lattices via solid state diffusion.