Efficient upconversion luminescence is observed from CdTe nanoparticles in solution and precipitated as solids. In the solids, the upconversion luminescence spectrum is significantly red shifted relative to the photoluminescence spectrum, whereas in solution, there is very little spectral shift. The upconversion luminescence exhibits a near-quadratic laser power dependence, both at room temperature and at 10 K. Both the upconversion and photoluminescence show similar decay dynamics with the solid samples showing shorter lifetimes compared to the solutions. This lifetime shortening is attributed to surface-state quenching. These results indicate that two-photon excitation is the likely upconversion excitation mechanism in these particles and that phonon-populated trap states do not contribute to the upconversion.