Oleic acid capped monodisperse SnO(2) quantum dots (QDs) of size 2.7 nm were synthesized by thermal decomposition and oxidation of Sn(II)(oleate) complex in high boiling nonpolar solvent octadecene using oleic acid as a capping agent and N-methylmorpholine N-oxide as an oxidizing agent. FTIR, DSC and TGA were employed to understand the growth of the oleic acid capped SnO(2) QDs through the decomposition of metal fatty acid complex. The surface defect-related luminescence properties of the QDs were demonstrated using steady-state and time-resolved spectroscopy. The oleic acid capping on the QD surface modifies the electronic structure of SnO(2) and generates blue emission. Moreover the surface capping on the QDs diminishes the photocatalytic activity of bare SnO(2) QDs due to absence of surface oxygen and adsorbed hydroxyl group on the surface of the capped QDs. The capping by the long chain ligand oleic acid makes the SnO(2) QDs less conducting. Ligand exchange of the long chain oleic acid (2.5 nm) by the short chain n-butylamine (0.6 nm) increases the current density of SnO(2) around 43 times due to the reduction of the interparticle distance. Ferromagnetic behaviour of oleic acid capped QDs may be ascribed to the defects in the host due to the alteration of the electronic structure owing to the capping.