A series of optically transparent quantum-size CdS crystal doped Na2O-B2O3-SiO2 glasses have been prepared from NaOAc, B(OC2H5)3, Si(OCH3)4 and Cd(OAc)2-2H2O by a sol-gel process. The glasses with CdS microcrystallites of wurtzite structure were developed by exposing CdO in the pre-heated gel to H2S gas and reheating to 590-degrees-C to densify the gel. Fully densified glasses containing 0.5-8.0 wt% CdS exhibit third-order non-linear susceptibility, chi(3), of (1.2-6.3) x 10(-7) esu for degenerate four-wave mixing (DFWM) with short (7 ns) laser pulses at wavelengths 450 and 460 nm. The average microcrystallite diameter observed by transmission-electron microscopy was from 3.5 to 6.0 nm.