A systematic study of nonlinear absorption and scattering properties of 4.5 nm sized CdS nanocrystals dispersed in dimethylformamide with varying concentrations is reported in this paper. The study is undertaken by performing open aperture Z -scan measurements with 532 nm nanosecond and 790 nm femtosecond pulse excitations. A modified Z -scan experimental setup is used to collect both nonlinear absorption and nonlinear scattering at different forward angles simultaneously. Optical limiting studies of these nanocrystals show that nonlinear scattering (NLS) is comparable to the two-photon absorption (TPA). Both the TPA and NLS coefficients are estimated by theoretical fit of the observed open aperture Z -scan curves. The variation of NLS coefficients with concentration is discussed in detail, and we estimated the thermo-optic coefficient of CdS nanocrystals. The nonlinear refractive index and limiting threshold (I12) of CdS nanocrystals at different concentrations (at 532 nm) are also estimated and reported. Further, we report our observation of the formation of diffraction fringes in the transmitted beam at high intensities. © 2006 American Institute of Physics.