Biomass-derived carbon dots (CDs) offer a sustainable alternative for nanomaterial synthesis; however, their photoluminescence properties often remain suboptimal. This study targets a green and cost-effective hydrothermal approach to prepare nitrogen-doped carbon dots (NCDs) using agricultural residues as precursors, with amine-rich waste serving as the nitrogen source. The resulting NCDs exhibited low cytotoxicity, exceptional water solubility, high stability, and excellent biocompatibility. The resulting NCDs exhibited a substantial improvement in fluorescence emission, in contrast to the nondoped CDs. Additionally, the NCDs demonstrated stability across a pH range of 2-12 and exhibited excellent selectivity and sensitivity for cobalt(II) ion detection, supported by computational studies, with efficient fluorescence quenching, achieving a detection limit of 39.8 nM. Importantly, the quenched fluorescence could be efficiently restored by adding EDTA. Additionally evaluated for their potential in nitric oxide (NO) sensing, these NCDs had a limit of detection of 53.2 μM. As NO is a fundamental signaling molecule in many physiological processes, its detection is rather crucial. Nitrogen doping effectively tuned the electronic structure of the NCDs, leading to evolved optical properties and an improved sensing ability. These NCDs were also assessed for their potential in bioimaging applications due to low cytotoxicity and efficient cellular uptake.