Three new 1,8-naphthalimide derivatives M1–M3 with different substituents at the C-4 position have been synthesized and characterized. Their photophysical properties have been investigated in organic solvents of different polarity, and their fluorescence intensity was found to depend strongly on both the polarity of the solvents and the type of substituent at C-4. For compounds M1 and M2 having a tertiary amino group linked via an ethylene bridge to the chromophore system, high quantum yield was observed only in non-polar media, whereas for compound M3, the quantum efficiency did not depend on the medium polarity. The effect of different metal ions (Ag+, Ba2+, Cu2+, Co2+, Mg2+, Pb2+, Sr2+, Fe3+, and Sn2+) on the fluorescence emission of compounds M1 and M2 was investigated. A significant enhancement has been observed in the presence of Ag+, Pb2+, Sn2+, Co2+, Fe3+, as this effect is expressed more preferably in the case of M2. Both compounds have shown significant pH dependence, as the fluorescence intensity was low in alkaline medium and has been enhanced more than 20-fold in acidic medium. The metal ions and pH do not affect the fluorescence intensity of M3. Density-functional theory (DFT) and Time-dependent density-functional theory (TDDFT) quantum chemical calculations are employed in deciphering the intimate mechanism of sensor mechanism. The functional properties of M1 and M2 were compared with polyamidoamine (PAMAM) dendrimers of different generations modified with 1,8-naphthalimide.