We report the synthesis of highly luminescent, water soluble quantum clusters (QCs) of gold, which are stabilized by an iron binding transferrin family protein, lactoferrin (Lf). The synthesized AuQC@Lf clusters were characterized using UV-Visible spectroscopy, X-ray photoelectron spectroscopy (XPS), transmission electron microscopy (TEM), photoluminescence (PL), matrix assisted laser desorption ionization mass spectrometry (MALDI-MS), FTIR spectroscopy and circular dichroism (CD) spectroscopy along with picosecond-resolved lifetime measurements. Detailed investigations with FTIR and CD spectroscopy have revealed changes in the secondary structure of the protein in the cluster. We have also studied Förster resonance energy transfer (FRET) occurring between the protein and the cluster. The ability of the clusters to sense cupric ions selectively at ppm concentrations was tested. The stability of clusters in widely varying pH conditions and their continued luminescence make it feasible for them to be used for intracellular imaging and molecular delivery, particularly in view of Lf protection. © 2010 The Royal Society of Chemistry.