In this work, we show strong experimental evidence in favor of a proposed incorporation mechanism of hydrophobic semiconductor nanocrystals (or quantum dots, QDs) in monodisperse silica spheres (diameter ∼35 nm) by a water-in-oil (W/O) reverse microemulsion synthesis. Fluorescence spectroscopy is used to investigate the rapid ligand exchange that takes place at the QD surface upon addition of the various synthesis reactants. It is found that hydrolyzed TEOS has a high affinity for the QD surface and replaces the hydrophobic amine ligands, which enables the transfer of the QDs to the hydrophilic interior of the micelles where silica growth takes place. By hindering the ligand exchange using stronger binding thiol ligands, the position of the incorporated QDs can be controlled from centered to off-center and eventually to the surface of the silica spheres. The proposed incorporation mechanism explains how we can have high control over the incorporation of single QDs exactly in the middle of silica spheres. It is likely that the proposed mechanism also applies to the incorporation of other hydrophobic nanocrystals in silica using the same method. In conjunction with our findings, we were able to make QD/silica particles with an unprecedented quantum efficiency of 35%.