A water-soluble polyhydroxylated fullerene, i.e., a fullerenol, with 44 hydroxyl groups and 8 secondary bound water molecules, C60(OH)44·8H2O (estimated average structure), has been synthesized in a facile one step reaction from pristine C60 by hydroxylation with hydrogen peroxide in the presence of a phase-transfer catalyst, tetra-n -butylammonium hydroxide (TBAH), under organic/aqueous bilayer conditions. The fullerenol exhibited high water solubility, up to 64.9 mg/mL, under neutral (pH = 7) conditions. Dynamic light-scattering (DLS) analysis showed a narrow particle size distribution, of 1–2 nm, indicating that the fullerenol had high dispersion properties in water. The results of particle size analyses, which both focused on a single nanoregion and were conducted using a novel induced grating (IG) method and a scanning probe microscope (SPM), were consistent with the DLS results. A plausible reaction mechanism, which includes fullerene oxide intermediates detected by liquid chromatography–mass spectrometry (LC–MS), has been proposed.