The influence of probing laser power density on the band-edge and the trap luminescence from CdS x Se 1−x nanoparticles embedded in a glass matrix is reported. Both the position and the strength of the band-edge luminescence are found to be very sensitive to the laser power. It is observed for the first time that the band-edge luminescence shifts initially towards low energy and then towards high energy with increasing laser power. The results are analysed in terms of laser-induced local heating and a band-filling mechanism, respectively, which are found to explain adequately the experimental observations. The shift due to the latter shows up only beyond a threshold value of the probing laser power density. The trap luminescence shows large contributions from surface states and undergoes photodarkening at high laser power, the degree of which depends strongly on the local temperature of the nanoparticles during illumination; this is reported here for the first time. This effect is explained in terms of a permanent trapping of charge carriers due to optical processes and thermally assisted optical processes.