Carbon dots (CDs) are an interesting nanomaterial due to their tunable photoluminescence and other functional properties. Herein, by introducing amine‐functionalized CDs nanoparticles onto macromolecular chains of maleic anhydride grafted styrene‐ethylene‐butylene‐styrene (SEBS‐g‐MA) via a possible ring‐opening reaction of anhydride with amine, a mechanically robust and ultrastretchable thermoplastic elastomeric materials with fluorescence and dielectric functionality was developed. The amine‐functionalized CDs nanoparticles were synthesized from pyrene precursor by hydrothermal treatment. The transmission electron micrograph, Raman, Fourier transform infrared, and x‐ray photoelectron spectra confirmed the formation of highly crystalline graphitized structure of the CDs nanoparticles. Fluorescence and UV–Vis spectroscopy were used to evaluate the optical properties of the developed materials. The developed CDs/SEBS‐g‐MA nanocomposites exhibited strong intense green fluorescence compared with the pure SEBS‐g‐MA film. The thermal stability of the developed nanocomposites was improved by an increase of the Tmax by about 18°C. In addition, the developed composite showed high stretchability (strain at break ~1000%), good mechanical strength, and dielectric properties (room temperature dielectric constant ~5.2). The enhanced dielectric property of the developed composites may be due to the space charge accumulation and induced interfacial polarization at the filler–matrix interface.