Biocompatible, near-infrared luminescent gold nanoclusters (AuNCs) are synthesized directly in water using poly(ethylene glycol)-dithiolane ligands terminating in either a carboxyl, amine, azide, or methoxy group. The ≈1.5 nm diameter AuNCs fluoresce at ≈820 nm with quantum yields that range from 4–8%, depending on the terminal functional group present, and display average luminescence lifetimes approaching 1.5 μs. The two-photon absorption (TPA) cross-section and two-photon excited fluorescence (TPEF) properties are also measured. Long-term testing shows the poly(ethylene glycol) stabilized AuNCs maintain colloidal stability in a variety of media ranging from saline to tissue culture growth medium along with tolerating storage of up to 2 years. DNA and dye-conjugation reactions confirm that the carboxyl, amine, and azide groups can be utilized on the AuNCs for carbodiimide, succinimidyl ester, and CuI-assisted cycloaddition chemistry, respectively. High signal-to-noise one- and two-photon cellular imaging is demonstrated. The AuNCs exhibit outstanding photophysical stability during continuous-extended imaging. Concomitant cellular viability testing shows that the AuNCs also elicit minimal cytotoxicity. Further biological applications for these luminescent nanoclustered materials are discussed.