Quantum dots (QDs) are promising materials for photovoltaic (PV) and light-emitting diode (LED) applications due to their unique properties: photostability, size-tunable absorptivity, and narrow line-width emission. These properties are tailored by surface passivations by ligands. However, ligands used in the synthesis of colloidal QDs need to be exchanged with ligands designed for specific applications. The mechanism behind ligand exchange is not well understood. Density functional theory (DFT) is utilized to gain fundamental understanding of ligand exchange (LE) and the resulting effect on the photophysics of QDs. Experimental studies show that phenyldithiocarbamates (PTCs) derivatives can improve the photocurrent of QD-based PVs. Our calculations show that the PTC undergoes decomposition on the CdSe QD surface. Decomposed products of PTCs strongly interact with the surface of QDs, which could cause unforeseen challenges during the implementation of these functionalized QDs in PVs. Secondly, we studied the mechanism of photoluminescence (PL) enhancement by hydride treatment. In experiments, the PL increases by 55 times, but the mechanism is unclear. We found that hydride can interact with surface Se2- producing H2Se gas and passivate surface Cd2+. These interactions result in optically active QDs. Thiol derivatives can also improve PL when LE results in low surface coverage of thiols. The PL is quenched if LE is performed at high concentrations and acidic environments. DFT simulations reveal three scenarios for the thiol interacts with QDs: coordination of thiol, networking between surface and/or other ligands, or thiolate formation. It is the last scenario that was found to be responsible for PL quenching. Lastly, PbS(e)/CdS(e) core/shell QDs are investigated to obtain relaxation rates of electron and hole cooling via interactions with phonons. The band structure of the core/shell QDs facilitates carrier multiplication (CM), a process that generates multiple charge carrier pairs per one absorbed photon. It is thought that CM is facilitated because there are interface associated states that reduce carrier cooling. Non-Adiabatic Molecular Dynamics (NAMD) simulations show that this hypothesis is correct and PbSe/CdSe carrier cooling is about two times slower compared to PbS/CdS due to weaker coupling to optical phonons.