In this paper, a novel “turn-on” chemosensor for detecting temperature and Fe³⁺ has been designed. This nanosensor is based on the aggregation-induced emission enhancement (AIEE) properties of fluorescent carbon dots (CDs). The CDs prepared by a facile hydrothermal route show blue emission (λ_em = 505 nm) with a quantum yield of 4.7%. The resultant CDs are modified by glutathione (GSH) on the surface through the carbodiimide-activated coupling reaction. The as-prepared GSH-CDs show good dispersion, high fluorescence and AIEE phenomenon. Resultant GSH-CDs would be aggregated by Fe³⁺ ions in aqueous solution which results in enhanced fluorescence. Therefore, such GSH-CDs would be excellent candidates as fluorescent probes for the label-free detection of Fe³⁺ ions with a limit of detection of 0.1 μM. Moreover, the PL intensity of GSH-CDs increases progressively with increasing temperature and they could be used in optical thermometry over a wide temperature range (25–80 °C) with small temperature resolution (∼0.5 °C). Using MC3T3-E1 cells as the model, the resultant nanosensor is demonstrated to monitor temperature and Fe³⁺ ions in cells. Thus, resultant GSH-CDs could be used as a “turn-on” sensor for highly sensitive and selective detection of temperature and Fe³⁺ ions in aqueous solution and biosystems.