A convenient preparation is reported for a series of functionalized, thiol-stabilized gold particles with subnanometer core diameters (d(CORE) = 0.8 +/- 0.2 nm). The preparation produces previously inaccessible materials through ligand exchange reactions of a phosphine-stabilized precursor, Au-11(PPh3)(8)Cl-3, with omega-functionalized alkanethiols. Convenient access to these new materials is a prerequisite to the detailed study of the electronic and optical properties of subnanometer particles and the investigation of the utility of these building blocks in nanoscale devices. Preliminary investigations of the optical properties of these new materials by UV-vis spectroscopy revealed that the particles have defined optical transitions. These results confirm the presence of discrete energy levels in the electronic structure of these materials that might be expected due to quantum size effects. Initial studies also suggest that the optical properties depend on the nature of the stabilizing ligand shell. The ligand exchange method described is applicable for a diverse family of alkanethiols to produce both organic- and water-soluble particles that show increased stability over the phosphine-stabilized precursor. Extensive characterization indicates that the thiol-stabilized exchange products have well-defined core sizes and dispersities.