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We report on the formation of optically active CdTe quantum dots in ZnTe nanowires. The CdTe/ZnTe nanostructures have been grown by a gold nanocatalyst assisted molecular beam epitaxy in a vapor-liquid solid growth process. The presence of CdTe insertions in ZnTe nanowire results in the appearance of a strong photoluminescence band in the 2.0 eV–2.25 eV energy range. Spatially resolved photoluminescence measurements reveal that this broad emission consists of several sharp lines with the spectral width of about 2 meV. The large degree of linear polarization of these individual emission lines confirms their nanowire origin, whereas the zero-dimensional confinement is proved by photon correlation spectroscopy.