Carbon dots (CDs) that exhibit fluorescence properties are generally derived from carbonaceous materials, and possess ultrasmall sizes with various exciting physical, chemical and photo-properties, which have been used in many different fields in recent time. Here, we have focused on the preparation of nitrogen-doped CDs (N-CDs) that emit a bright blue fluorescence upon exposure to UV excitation. Furthermore, by employing Rhodamine B (RhB) as a donor molecule, the emission color of N-CDs is altered from blue to red. Interestingly, the optical tuning based upon emission from one particular color to various other colors has been achieved by varying the doping ratio of the donor molecule, RhB. The reason is mainly attributed to the non-radiative energy transfer of the exciton energy from an excited donor to an acceptor through fluorescence resonance energy transfer (FRET). Furthermore, this emission behavior is explored for the ratiometric sensing of mercury ion (Hg²⁺) in aqueous medium. Among different color emissions, we chose one particular emission color, namely violet, for the detection of the Hg²⁺ ion. The photoluminescence properties of N-CDs are effectively and systematically quenched with the addition of different mercury ion concentrations, leading to efficient energy transformation arising from the synergetic effect of the electrostatic interaction and metal – ligand coordination between the surface functional groups of N-CDs and Hg²⁺ ion. On the other hand, RhB has no interaction with Hg²⁺ ions. These findings provide a way for developing a cheap, selective and suitable sensing matrix for the detection of toxic metal ions, such as mercury (Hg²⁺) at a low concentration level.