A facile, economic and green one-step hydrothermal synthesis route using dopamine as source towards photoluminescent carbon nanoparticles (CNPs) is proposed. The as-prepared CNPs have an average size about 3.8 nm. The emission spectra of the CNPs are broad, ranging from approximately 380 (purple) to approximately 525 nm (green), depending on the excitation wavelengths. Due to the favorable optical properties, the CNPs can readily enter into A549 cells and has been used for multicolor biolabeling and bioimaging. Most importantly, the as-prepared CNPs contain distinctive catechol groups on their surfaces. Due to the special response of catechol groups to Fe3+ ions, we further demonstrate that such wholly new CNPs can serve as a very effective fluorescent sensing platform for label-free sensitive and selective detection of Fe3+ ions and dopamine with a detection limit as low as 0.32 μM and 68 nM, respectively. The new “mix-and-detect” strategy is simple, green, and exhibits high sensitivity and selectivity. The present method was also applied to the determination of Fe3+ ions in real water samples and dopamine in human urine and serum samples successfully.