Fresh produce deteriorates and spoils after harvest due to its perishable nature. Deterioration in quality over time has become a major problem for the food industry, placing an undue burden on the economy and agriculture. Food scientists have developed various methods and technologies to prevent spoilage of fruits and vegetables during storage and logistics. Utilizing carbon quantum dots (CQDs) in the form of active packaging and coatings has been a popular strategy recently. CQDs have recently attracted attention as sustainable and functional nanomaterials. CQDs are popular among food scientists due to their easy and economical synthesis, sustainability, non-toxicity, biocompatibility, edibility, UV protection, and antibacterial and antioxidant activities. Although many studies have been conducted and reviewed on the utilization of CQDs in the manufacture of flexible active packaging materials, relatively few studies have investigated the use of CQDs in edible coating formulations for fresh produce. The main reasons for this are concerns about the potential toxicity and edibility of CQDs if they are coated directly on fresh produce. Therefore, this review aims to address these issues by investigating the dose-dependent non-toxicity and biocompatibility of sustainable CQDs along with other important properties from a food packaging perspective. Additionally, this review focuses on the studies performed so far on the direct coating of CQD-based formulations on fresh and fresh-cut fruits and vegetables and discusses the important impact of CQDs on the quality of coated agricultural products. This review is intended to provide food packaging researchers with confidence and prospects for utilizing sustainable CQDs in direct coating formulations for food.