Abstract Some quantum dots (QDs) have been applied for drug delivery and imaging in biological systems. Drug delivery via the lung and lung imaging are potential applications of QDs. QD705 is cadmium based. The aims of the study were to evaluate the biological effects of QD705 in the lungs and the protective effects of polyethylene glycol (PEG) coating against QD705-induced biological responses. Intratracheal instillation of QD705-COOH persistently induced acute neutrophil infiltration, followed by interstitial lymphocyte infiltration and a granulomatous reaction on days 17 and 90. QD705-COOH also induced gene expression of cytokines, chemokines and metalloproteinase 12 in lung tissues. Furthermore, QD705-COOH transiently reduced pulmonary function on day 17. Treatment with QD705-PEG induced similar inflammatory responses and reduced pulmonary function on day 17, but the granulomatous reaction disappeared by day 90 These data indicated that administration of QD705 via the lung caused adverse responses and PEG coating failed to prevent these effects.