Water-dispersible ZnS:Mn nanocrystals were synthesized by capping the surface of the nanocrystal with O-(2-Aminoethyl)polyethylene glycol (PEG-$NH_2$, Mw = 10,000 g/mol) and O-(2-Carboxyethyl)polyethylene glycol (PEG-COOH, Mw = 10,000 g/mol) molecules. The modified PEG capped ZnS:Mn nanocrystal powders were thoroughly characterized by XRD, HR-TEM, EDXS, ICP-AES and FT-IR spectroscopy. The optical properties were also measured by UV/Vis and photoluminescence (PL) spectroscopies. The PL spectra showed broad emission peaks at 600 nm with similar PL efficiencies of 7.68% (ZnS:Mn-PEG-NH2) and 9.18% (ZnS:Mn-PEG-COOH) respectively. The measured average particle sizes for the modified PEG capped ZnS:Mn nanocrystals by HR-TEM images were 5.6 nm (ZnS:Mn-PEG-NH2) and 6.4 nm (ZnS:Mn-PEG-COOH), which were also supported by Debye-Scherrer calculations. In addition, biological toxicity effects of the nanocrystals over the growth of wild type E. coli were investigated. They showed no biological toxicity to E. coli until very high concentration dosage of 1 mg/mL of the both nanocrystal samples.