A multifunctional and high-efficiency microfluidic device for droplet generation and fusion is presented. Through unique design of the micro-channels, the device is able to alternately generate droplets, generating droplet ratios ranging from 1 ratio 5 to 5 ratio 1, and fuse droplets, enabling precise chemical reactions in several picoliters on a single chip. The controlled fusion is managed by passive control based on the channel geometry and liquid phase flow. The synthesis of CdS nanoparticles utilizing each fused droplet as a microreactor for rapid and efficient mixing of reagents is demonstrated in this paper. Following alternating droplet generation, the channel geometry allows the exclusive fusion of alternate droplets with concomitant rapid mixing and produces supersaturated solution of Cd2+ and S2- ions to form CdS nanoparticles in each fused droplet. The spectroscopic properties of the CdS nanoparticles produced by this method are compared with CdS prepared by bulk mixing.