Carbon quantum dots (CQDs) are a class of carbon nanomaterials that have recently gained recognition as current entrants to traditional semiconductor quantum dots (QDs). CQDs have the desirable advantages of low toxicity, environmental friendliness, low cost, photostability, favorable charge transfer with enhanced electronic conductivity, and their comparable easy synthesis protocols. This article examines advancements in CQD research and development, with a focus on their synthesis, functionalization, and energy applications. Initially, various synthesis methods are discussed briefly with pros and cons. Herein, first top-down methods including arc discharge technique, laser ablation technique, plasma treatment, ultrasound synthesis technique, electrochemical technique, chemical exfoliation, and combustion were discussed briefly. The later section presents bottom-up (microwave synthesis, hydrothermal synthesis, thermal pyrolysis, and MOF template-assisted approach) and waste-derived CQDs synthesis methods. The next section is focused on the energy applications of CQDs including supercapacitors, lithium-ion batteries, photovoltaics, hydrogen (HER), and oxygen evolution reaction (OER). Finally, challenges and perspectives in this exciting and promising area are presented.