This paper describes the synthesis of CdSe nanocrystals in a phosphate matrix. It presents the results of experimental studies of the bleaching and optical nonlinearity of the nanocrystals by the method of three-wave mixing using biharmonic pumping with various detuning frequencies and powers of the exciting radiation. The results are interpreted on the basis of a model that takes into account various optical nonlinearity mechanisms of the nanocrystals. (C) 1995 The Optical Society of America.