Hydrophobic blue fluorescent nanodiamond was synthesized by covalent linking of octadecylamine to the surface of nanodiamond particles. The material is easily dispersible in hydrophobic solvents, forming a transparent colloidal solution, and can be used in those applications where stable dispersions of nanodiamond in fuels, polymers or oils are required. Bright blue fluorescence of the octadecylamine-modified nanodiamond opens up new avenues for its use as a non-toxic quantum dot analogue for biomedical imaging of cellular membranes and other hydrophobic components of biological systems. Similar surface modification can be used for other carbon nanoparticles.