Methodology for incorporation of 50 A CdS quantum dots (QD) in a polystyrene matrix, based on phase transfer of CdS quantum dots from an aqueous to organic phase, was developed. The obtained composite was characterized using optical, structural and thermal techniques. Infra red measurements revealed formation of chemical bonds between the surface of the CdS QDs and the polystyrene matrix. The polystyrene matrix blocked the surface states that promote radiationless recombination, resulting in enhanced band-to-band luminescence of CdS QDs. On the other hand, in the presence of CdS QDs the thermal decomposition of polystyrene was shifted towards higher temperature for about 100 degreesC.