Carbon quantum dots (CQDs) are a fascinating class of carbon nanoparticles with sizes around 10 nm. The unique properties of CQDs are low toxicity, chemical inertness, excellent biocompatibility, photo-induced electron transfer and highly tunable photoluminescence behaviour. Sustainable raw materials are commonly used for the fabrication of CQDs because they are cost-effective, eco-friendly and effective to minimise waste production. CQDs can be fabricated using laser ablation, microwave irradiation, hydrothermal reaction, electrochemical oxidation, reflux method and ultrasonication. These methods undergo several chemical reactions such as oxidation, carbonisation, pyrolysis and polymerisation processes to produce CQDs. Due to small particle sizes of CQDs, they possess strong tunable fluorescent properties and highly photo-luminescent emissions. It also contains oxygen-based functional groups and highly desired properties as semiconductor nanoparticles. Therefore, CQDs are promising nanomaterials for photo-catalysis, ions sensing, biological imaging, heavy metal detection, adsorption treatment, supercapacitor, membrane fabrication and water pollution treatment. This review paper will discuss the physical and chemical properties of CQDs, raw materials and methods used in the fabrication of CQDs, the stability of CQDs as well as their potential applications in wastewater treatment and biomedical field.