Cd(OH)2 nanocrystals were prepared by inducement of ultrasonic waves using aqueous solutions of cadmium acetate and sodium hydroxide in presence of 5 mmol 3-Mercaptopropionic acid (3-MPA) as a capping agent. After thermal treatment at 250 °C during 1 hour, Cd(OH)2 nanocrystals transforms to CdO regime. The X-ray diffraction (XRD) studies display that the products are well crystallized in the form of cubic structure. Scanning electron microscope (SEM) images reveal that the product consisting of sphere nanocrystallites of about 30-50nm diameter, which aggregated in the form of polydispersive clusters. Optical measurements indicate a direct band gap of about 3.4 eV. There was observed a blue shift of about 1.1 eV, in comparison to its bulk value due to quantum confinement effects of electrons and holes.