CdS/PbS core-shell nanoparticles are grown via ion-exchange reaction route. Devices based on such nanoparticles exhibit electrical bistability and memory phenomena. We show that the bistability is due to charge confinement in the nanoparticles. Here, although the low-bandgap material allows facile carrier injection from the electrodes, the high-bandgap one traps and confines charges to yield high-conducting state. The results show that the degree of electrical bistability or On/Off ratio in some of the CdS/PbS core-shell nanoparticles is several orders higher in magnitude than that in the individual components. We show how the shell/core ratio controls charge confinement and hence electrical bistability. Core-shell nanoparticles hence provide a newer route to optimize electrical bistability and memory phenomena. © 2008 American Chemical Society.