In this work, we demonstrated a convenient and green strategy for the synthesis of highly luminescent and water-soluble carbon dots (Cdots) by carbonizing carbon precursors, i.e., Bovine serum albumin (BSA) nanoparticles, in water solution. Without post surface modification, the as-synthesized Cdots exhibit fluorescence quantum yield (Q.Y.) as high as 34.8% and display superior colloidal stability not only in concentrated salt solutions (e.g. 2 M KCl) but also in a wide range of pH solutions. According to the FT-IR measurements, the Cdots contain many carboxyl groups, providing a versatile route for further chemical and biological functionalization. Through conjugation of Cdots with the transacting activator of transcription (TAT) peptide (a kind of cell penetration peptide (CPP)) derived from human immunodeficiency virus (HIV), it is possible to directly monitor the dynamic interactions of CPP with living cell membrane at single particle level. Furthermore, these Cdots also exhibit a dosage-dependent selectivity toward Fe(3+) among other metal ions, including K(+), Na(+), Mg(2+), Hg(2+), Co(2+), Cu(2+), Pb(2+) and Al(3+). We believed that the Cdots prepared by this strategy would display promising applications in various areas, including analytical chemistry, nanomedicine, biochemistry and so on.