We propose a simple, economical, and one-pot method to synthesize water-soluble functionalized fluorescent carbon dots (C-Dots) through electrochemical carbonization of sodium citrate and urea. The as-prepared C-Dots have good photostability and exhibit a high quantum yield of 11.9%. The sizes of the C-Dots are mainly distributed in the range of 1.0–3.5 nm with an average size of 2.4 nm. It has been further used as a novel label-free sensing probe for selective detection of Hg2+ ions with detection limit as low as 3.3 nM. The detection linear range is 0.01–10 μM. The as-prepared C-Dots are also successfully applied for the determination of Hg2+ in real water samples.