The hydrogel network regulates a significant role in the self-assembly, complexation and chelation with guest molecules like ions or small chemical moieties. In the present research work, a sensitive and greenish-yellow fluorescent hydrogel Chitosan/2-hydroxy-1-naphthaldehyde (ChN) has been prepared purposefully. Interestingly, springy and fluorescent ChN hydrogel shows excellent dual functionality, immobilization and quenching selectivity for Cd2+ ions by chelation in the sol phase. The “signal-off” behavior of ChN/Cd2+ has been established by the prominent chelation enhanced quenching mechanism (CHEQ) with a strong spin-orbit coupling. The fluorescence lifetime measurement and evaluation of Stern–Volmer relationship confirm the stability and selectivity of Cd2+ ions for ChN over other cations at a detection limit of 0.223 nM (S/N = 2). The reversibility of complexation or signal-on behavior of free ChN present in ChN/Cd2+ complex has been examined with a replaceable and strong chelating agent ethylene diamine tetra acetic acid. ChN is found to be credibly suitable for monitoring Cd2+ ions in aquatic environmental system.