Many types of metal and semiconductor nanoparticles (NPs) are created via colloidal synthetic methods, which renders the materials hydrophobic. Such NPs are dispersed in water through surface organic cap exchange or by amphiphilic polymer encapsulation; often, water solubility is achieved via the presence of carboxylic acid functionalities on the solubilizing agents. While this renders the material water-soluble, subsequent functionalization of the systems can be very difficult. The most obvious method to derivatize carboxylic acid coated NPs is to conjugate chemical and biological moieties containing amine functionality to the NP surface using the water-soluble activator 1-ethyl-3-(3-dimethylaminopropyl) carbodiimide hydrochloride (EDC). However, the excess use of this reagent appears to cause complete and permanent precipitation of the NPs. We report here our method on the chemical and biological functionalization of a variety of semiconductor nanoparticle systems using novel carbodiimide reagents. These reagents do not cause precipitation even at high loading levels and can be used to efficiently functionalize carboxylic acid coated NPs.