We describe the deposition and characterization of nanocrystalline CdTe films which exhibit size quantization. The CdTe films were electrodeposited from a dimethylsulfoxide solution of tri-(n-butyl)phosphine telluride and cadmium perchlorate at 100 degrees C. The stoichiometry of the films depends on applied potential and solution composition. The films contained about 5-10% Te excess and exhibited small blue shifts (0.1-0.2 eV) in their optical spectra. XRD and electron microscopy indicated a typical crystal size of ca. 8 nm. Pulse reverse plating was used to improve the film stoichiometry. The nanocrystal size could be controlled by the pulse parameters, and almost stoichiometric films with average crystal sizes from 4 to 7 nm were obtained, showing increases in bandgap up to 0.8 eV. Annealing the films resulted in gradual crystal growth and corresponding spectral red shifts until the bulk bandgap was reached. X-ray photoelectron spectroscopy (XPS) showed phosphorous incorporation in the films. The small crystal size was attributed to capping of the depositing CdTe by phosphine groups and could be controlled by the duty cycle of the plating pulsed current, whereby a longer off-time allowed more efficient capping and therefore smaller nanocrystal size.