One of the main roadblocks to higher efficiencies for warm-white LED light sources is spectrally-wide red-emitting bulk phosphors, which emit a significant amount of their energy either in the far red or infrared where the eyes response is poor or zero. Consequently, employing those phosphors (along with bulk green-yellow emitting ones) will result in desired warmer light sources, however, at the expense of lower efficiency. Colloidal nanocrystals have been touted for years as a solution to this problem; however, they still suffer from unwanted quenching of the quantum efficiency and increases in their spectral width at the elevated temperatures and excitation levels that are attained during operation of high power LEDs. Previously, we have formed a new and novel class of high efficiency non-toxic nanocrystals which overcome these long-standing problems with nanocrystals. However, in common with all other nanocrystals, our materials suffer from long-term stability issues. In this project, we will significantly increase the lifetime of our nanocrystals by applying to them low-cost inorganic-based encapsulants. Candidate encapsulant materials will be synthesized, analyzed for performance, and then optimized accordingly in order to enable the maximum efficiency and lifetime for the nanocrystals. In tandem, the synthetic procedure and composition of the nanocrystals will be modified in order to best enable their performance when coupled with the encapsulant materials. The goal for the Phase I is for the nanocrystals to maintain their current high performance optical properties, while significantly enhancing their long-term stability (>1000 hours) under typical LED accelerated conditions. Given these properties, the resulting low-cost nanocrystal-based phosphor chips can be placed directly on blue LEDs, while maintaining high efficiency for thousands of hours. In conjunction with pc-LEDs containing green-yellow emitting phosphors, the phosphor chips can be used to create warm-white LEDs with up to a factor of 1.3 increase in white LED system efficacy while enabling quality white light with a high color rendering. By adding green- and yellow-emitting nanocrystals to the phosphor chip further LED system efficacy gains can be made, while enabling custom light sources to be formed. These performance advantages will enable both commercial and consumer customers to lower their general lighting energy costs, obtain higher quality lighting, and reduce their carbon footprint. Key Words: Solid state lighting, nanocrystal, phosphor, efficiency