Recent studies have suggested that certain nanomaterials can interfere with optically based cytotoxicity assays resulting in underestimations of nanomaterial toxicity. As a result there has been growing interest in the use of whole cell electrochemical biosensors for nanotoxicity applications. Herein we report application of an electrochemical cytotoxicity assay developed in house (TOXOR) in the evaluation of toxic effects of mercaptosuccinic acid capped cadmium telluride quantum dots (MSA capped CdTe QDs), toward mammalian cells. MSA capped CdTe QDs were synthesized, characterized, and their cytotoxicity toward A549 human lung epithelial cells investigated. The internalization of QDs within cells was scrutinized via confocal microscopy. The cytotoxicity assay is based on the measurement of changes in cellular enzyme acid phosphatase upon 24 h exposure to QDs. Acid phosphatase catalyzes dephosphorylation of 2-naphthyl phosphate to 2-naphthol (determined by chronocoulometry) and is indicative of metabolic activity in cells. The 24 h IC50 (concentration resulting in 50% reduction in acid phosphatase activity) value for MSA capped CdTe QDs was found to be 118 ± 49 μg/mL using the TOXOR assay and was in agreement with the MTT assay (157 ± 31 μg/mL). Potential uses of this electrochemical assay include the screening of nanomaterials, environmental toxins, in addition to applications in the pharmaceutical, food, and health sectors.