In this study, we have reported an economical, easy, greener and non-toxic synthesis route of water soluble carbon quantum dots (CQDs) through hydrothermal treatment using gelatin as precursor. Under the UV lamp of wavelength 365 nm, the as-prepared CQDs exhibit strong blue fluorescence along with CIE coordinate index of (0.17, 0.14) and possess a quantum yield of 22.7% with rhodamine B as standard. The morphology of as-synthesized CQDs as investigated by TEM measurement confirmed their spherical shape and also revealed that their sizes varied in the scale of 0.5-5 nm. Furthermore, the CQDs showed excitation dependent fluorescence emission behaviour in range of 280 nm to 420 nm as a result of quantum confinement effect. Apart from this, in CQDs solution, the addition of Fe ion lead to fluorescence quenching effect. These results revealed that the as-synthesized CQDs have a sensitive response towards the Fe ion. The calculated limit of detection (LOD) is 0.2 μM with correlation coefficient R = 0.996 in the concentration range 0 to 50 μM. More remarkably, the application of CQDs for monitoring the trace level of Fe ion in tap water yielded acceptable recoveries (103.33%-105%). Therefore, this work provides a novel additional fluorescent probe for the detection of Fe ion in real world.