An ingenious method for large-scale fabrication of water-soluble photoluminescent carbon dots (CDs) by a one-step microwave pyrolysis of oxalic acid (OA) and urea is developed. The structure and optical properties of the CDs are characterized by transmission electron microscopy, high-resolution transmission electron microscopy, X-ray diffraction patterns, elemental analysis, X-ray photoelectron spectroscopy, Fourier transform infrared spectroscopy, UV-vis absorption, and photoluminescence spectroscopy. The mechanism for the formation of the CDs is also discussed. In contrast to other CD-based nanomaterials, the as-prepared CDs exhibit high fluorescent quantum yield and excellent stability in both organic and inorganic phases. After simple post-treatment, the CDs are applied as fluorescent powder, showing their promising potential for further wide usage. In addition, the CDs can be utilized as a modification-free biosensor reagent capable of detecting Fe3+ and Ag+ in complex environments. The linear ranges for Fe3+ and Ag+ were 1.0-130 and 0.50-200 mu M with the corresponding detection limits of 4.8 and 2.4 nM, respectively. More significantly, the CDs are superior fluorescent bioimaging agents in plants and cells based on their excellent water-solubility and ultra-low toxicity. Finally, the assynthesized CDs are successfully applied for detecting Fe3+ and Ag+ in biosystems.