Carbon dots (CDs)-based nanoparticles have been extensively explored for biological applications in sensing and bioimaging. However, the major translational barriers to CDs for imaging and sensing applications include synthetic strategies to obtain monodisperse CDs with tunable structural, electronic, and optical properties in order to achieve high-resolution deep-tissue imaging, intracellular detection, and sensing of metal ions with high sensitivity down to nanomolar levels. Herein, we report a novel strategy to synthesize and develop a multifunctional nitrogen-doped CDs probe of different sizes using a new combination of carbon and nitrogen sources. Our results show that the structural characteristics (i.e., the surface density of emissive traps and bandgaps levels) depend on the size of the CDs, which ultimately influences their optical properties. This work also demonstrates the development of a two-photon dual-emissive fluorescent multifunctional probes (3-FCDs) by conjugating fluorescein isothiocyanate on the surface of nitrogen-doped CDs. 3-FCDs show excellent near-infrared two-photon excitation ability, single-wavelength excitation, high photostability, biocompatibility, low cytotoxicity, and good cell permeability. Using two-photon fluorescence imaging, our multifunctional probe shows excellent deep-tissue high-resolution imaging capabilities with penetration depth up to 3000 and 280 µm in hydrogel scaffold and pigskin tissue, respectively. The designed probe exhibits ultrasensitivity and specificity toward Fe3+ ions with a remarkable detection limit of 2.21 nM using two-photon excitation. In addition, we also demonstrate the use of multifunctional CDs probe for ultrasensitive exogenous and real-time endogenous sensing of Fe3+ ions and imaging in live fibroblasts with rapid response times for intracellular ferric ion detection.