It is commonly believed that high-quality CdTe nanoparticles with strong luminescence can only be prepared under the protection of an inert gas such as nitrogen or argon. Here, we report the preparation of highly luminescent CdTe nanoparticles in air and compare their luminescence properties with CdTe nanoparticles made in nitrogen. We find that both water-soluble CdTe nanoparticles made in air and in nitrogen exhibit strong photoluminescence as well as upconversion luminescence at room temperature. However, differences do exist between the particles made in air and those made in nitrogen. In particular, the particles prepared in air display a faster growth rate, grow to larger sizes, and display stronger electron coupling relative to the particles prepared in nitrogen. X-ray photoelectron spectroscopy analysis indicates that the oxygen content in the nanoparticles synthesized in air is higher that that in particles synthesized in N(2), likely resulting in a higher availability of excess free cadmium. Cytotoxicity measurements reveal that the particles made in air appear slightly more toxic, possibly due to the excess of free cadmium.