This study aimed to report a new strategy for efficient upconversion (UC) enhancement of rare earth doped nanomaterials via carbon dots (CDs) modification on semiconducting nanosheets. CDs-modified Er³⁺/Yb³⁺ co-doped BiOCl nanosheets were synthesized via a facile hydrothermal and subsequent heat treatment method for the first time. Under excitation of a 980 nm laser, the CDs/BiOCl:Yb³⁺,Er³⁺ composites could present up to ten times improvement in the UC emission intensity and an extended fluorescence lifetime simultaneously. The experimental results indicate that the surface passivation and the increased photocarrier separation efficiency of Er³⁺/Yb³⁺ co-doped BiOCl nanosheets by CDs modification synergistically enhance the UC photoluminescence of Er³⁺ ions by extending the decay time of excited state levels. Moreover, such composite materials with enhanced UC luminescence can be used as highly sensitive optical thermometers using the fluorescence intensity ratio technique in which green emissions are suitable for temperatures below 293 K with the maximum relative sensitivity of 1.35% K⁻¹ and red emissions are appropriate for temperatures above 573 K with the maximum sensitivity of 0.32% K⁻¹ in the experimental range. This study not only opened new perspectives for the enhanced UC luminescence but also paved a way for the design and fabrication of high-efficiency UC nanocrystals for potential applications in optical temperature sensing.