After entering in water, Fe3+ is enriched in the human body and along the food chain, causing chronic poisoning and irreversible harm to human health. In order to solve this problem, we synthesized citric acid POSS (CAP) from aminopropyl POSS (OAP) and citric acid. Then, we synthesized fluorescent hydrogels (CAP-agarose hydrogel, CAHG) with CAP and agarose. The luminescence mechanism of CAP was investigated by theoretical calculation. CAP plays a dual role in composite hydrogels: one is to give the gels good fluorescence properties and detect Fe3+; the second is that the surface of CAP has a large content of carbonyl and amide groups, so it can coordinate with Fe3+ to enhance the adsorption properties of hydrogels. The experimental results show that the lowest Fe3+ concentration that CAHG can detect is 5 μmol/L, and the adsorption capacity for Fe3+ is about 26.75 mg/g. In a certain range, the fluorescence intensity of CAHG had an exponential relation with Fe3+ concentration, which is expected to be applied to fluorescence sensors. Even at a lower concentration, CAHG can effectively remove Fe3+ from the solution. The prepared fluorescent hydrogel has great potential in the field of fluorescent probes, fluorescent sensors, and ion adsorption. Besides, CAHG can be used as photothermal material after adsorbing Fe3+, allowing for material recycling and reducing material waste.