We demonstrate a low-temperature synthesis of hydrophilic, penicillamine-stabilized hybrid CdS-Au nanoparticles (NPs) utilizing different Au concentrations. The obtained hybrid nanomaterials exhibit photoluminescence quenching and emission lifetime reduction in comparison with their raw semiconductor CdS NPs counterparts. An increase of concentration of Au present at the surface of CdS leads to lower photoluminescence intensity and faster emission decays, suggesting more efficient charge separation when larger Au domains are present. For photocatalysis studies, we performed methylene blue (MB) absorption measurements under irradiation in the presence of CdS-Au NPs. After 1 h of light exposure, we observed the absorbance decrease to about 35% and 10% of the initial value for the CdS-5Au and CdS-7.5Au (the hybrid NPs obtained in a presence of 5.0 and 7.5 mM Au), respectively, which indicates MB reduction caused by electrons effectively separated from holes on metal surface. In further similar photocatalysis experiments, we measured bovine serum albumin (BSA) integrated photoluminescence intensity quenching in the presence of CdS-Au NPs, with a 50% decrease being obtained for CdS-2.5Au NPs and CdS-5Au NPs, with a faster response rate detected for the system prepared with a higher Au concentration. The results suggest hole-driven reactive oxygen species (ROS) production, causing BSA degeneration. Finally, we performed two-photon excited emission (TPEE) measurements for CdS-5Au NPs, obtaining their two-photon absorption (TPA) cross-section values up to 15.8 × 103 GM (Goeppert-Mayer units). We conclude that the obtained water-soluble CdS-Au NPs exhibit potential triple functionalities as photocatalysts for reduction and oxidation reactions as well as materials for two-photon absorption applications, so that they may be considered as future theranostics.