Quantum dots (QDs) are widely used in optoelectronics, lighting, and photovoltaics leading to their potential release into the environment. The most promising alternative to the highly toxic cadmium selenide (CdSe) QDs are indium phosphide (InP) QDs, which show reduced toxicity and comparable optical and electronic properties. QD degradation leads to the release of toxic metal ions into the environment. Coating the QD core with robust shell(s) composed of another semi-conductor material enhances their properties and protects the QD from degradation. We recently developed double-shelled InP QDs, which proved to be less toxic than single-shell QDs. In the present study, we confirm their reduced cytotoxicity, with an LC50 at 77 nM for pristine gradient shell QDs and >100 nM for pristine thin and thick shell QDs. We also confirm that these three QDs, when exposed to simulated sunlight, show greater cytotoxicity compared to pristine ones, with LC50 ranging from 15 to 23 nM. Using a combination of spectroscopic and microscopic techniques, we characterize the degradation kinetics and transformation products of single- and double-shell QDs, when exposed to solar light at high temperature, simulating environmental conditions. Non-toxic pristine QDs degrade to form toxic In–phosphate, In–carboxylate, Zn–phosphate, and oxidized Se, all of which precipitate as heterogeneous deposits. Comparison of their degradation kinetics highlights that the QDs bearing the thickest ZnS outer shell are, as expected, the most resistant to photodegradation among the three tested QDs, as gradient shell, thin shell, and thick shell QDs lose their optical properties in less than 15 min, 60 min, and more than 90 min, respectively. They exhibit the highest photoluminescence efficiency, i.e., the best functionality, with a photoluminescence quantum yield in aqueous solution of 24%, as compared to 18% for the gradient shell and thin shell QDs. Therefore, they can be considered as safer-by-design QDs.