Aqueous suspensions of poly(ethylene oxide)-grafted nanocrystalline cellulose (PEO-grafted NCC) were prepared in order to achieve steric instead of electrostatic stabilization. A two-step process was employed: in the first step NCC suspensions prepared by sulfuric acid hydrolysis were desulfated with sodium hydroxide, and in the second step the surfaces of the crystals were functionalized with epoxy-terminated poly(ethylene oxide) (PEO epoxide) under alkaline conditions. The PEO-grafted samples were analyzed by conductometric titration, ATR-IR, solid-state NMR, MALDI-ToF MS, SEC MALLS, and A FM. The covalent nature of the linkage was confirmed by weight increase and MALDI-TOF analysis. The PEO-grafted cellulose nanocrystals (CNCs) formed a stable colloidal suspension that remained well dispersed, while the desulfated nanoparticles aggregated and precipitated. Upon concentration of the PEO-grafted aqueous NCC suspension, a chiral nematic phase was observed.