We synthesized Hg alloyed CdTe quantum dots (Cd1−xHgxTe) using hydrothermal route. N-acetyl-cysteine is used as the capping agent for water dispersed Cd1−xHgxTe (x = 0, 0.05, 0.1 and 0.5) quantum dots. The diameter of the synthesized quantum dots is 3.8 ± 0.5 nm, as estimated from high resolution transmission electron micrographs. The mercury molar fraction modified band gap engineering is demonstrated with band gap changing from 2.5 eV for CdTe quantum dots to 1.25 eV for Cd0.5Hg0.5Te. © Springer Nature Switzerland AG 2019.