This work aims to enhance the value of palm empty fruit bunches (EFBs), an abundant residue from the palm oil industry, as a precursor for the synthesis of luminescent carbon dots (CDs). The mechanism of fIuorimetric sensing using carbon dots for either enhancing or quenching photoluminescence properties when binding with analytes is useful for the detection of ultra-low amounts of analytes. This study revealed that EFB-derived CDs via hydrothermal synthesis exceptionally exhibited luminescence properties. In addition, surface modification for specific binding to a target molecule substantially augmented their PL characteristics. Among the different nitrogen and sulfur (N and S) doping agents used, including urea (U), sulfate (S), p-phenylenediamine (P), and sodium thiosulfate (TS), the results showed that PTS-CDs from the co-doping of p-phenylenediamine and sodium thiosulfate exhibited the highest PL properties. From this study on the fluorimetric sensing of several metal ions, PTS-CDs could effectively detect Fe3+ with the highest selectivity by fluorescence quenching to 79.1% at a limit of detection (LOD) of 0.1 µmol L−1. The PL quenching of PTS-CDs was linearly correlated with the wide range of Fe3+ concentration, ranging from 5 to 400 µmol L−1 (R2 = 0.9933).