We present a simple strategy to generate a family of carbon dots/iron oxide nanoparticles (C/Fe-NPs) that relies on the thermal decomposition of iron (III) acetylacetonate in the presence of a highly fluorescent carbon-rich precursor (derived via thermal treatment of ethanolamine and citric acid at 180 °C), while polyethylene glycol serves as the passivation agent. By varying the molar ratio of the reactants, a series of C/Fe-NPs have been synthesized with tuneable elemental composition in terms of C, H, O, N and Fe. The quantum yield is enhanced from 6 to 9% as the carbon content increases from 27 to 36 wt%, while the room temperature saturation magnetization is improved from 4.1 to 17.7 emu/g as the iron content is enriched from 17 to 31 wt%. In addition, the C/Fe-NPs show excellent antimicrobial properties, minimal cytotoxicity and demonstrate promising bioimaging capabilities, thus showing great potential for the development of advanced diagnostic tools.