By using a novel procedure, a new kind of water-soluble CdTe nanocrystals (NCs) is synthesized in aqueous solutions at the temperature of 100 degrees C. In this procedure, tripeptide thiol glutathione was used as stabilizing agent, CdTe NCs with controllable photoluminescence wavelength from 500 nm to 680 nm were prepared within two hours. Compared with CdTe NCs prepared with thiohydracrylic acid as stabilizing agent, as-prepared NCs show much narrower photoluminescence FWHM, more symmetrical emission peak and higher photoluminescence quantum yield. The surface structure of as-prepared CdTe NCs is deduced, therefore, there may be some unreported circular structure on the surface. Experimental results show that as-prepared NCs have very good biological compatibility and they are nontoxic. And these CdTe NCs can conjugate with biological molecules for further biological luminescence study. The proposed hydrothermal synthesis procedure has the advantage of simplicity, inexpensiveness, time saving and mild operating conditions.