Fluorescent graphene quantum dots (GQDs) have attracted tremendous attention because of their unique 2D layered structure, large surface area, good water solubility, tunable fluorescence, high photostability, excellent biocompatibility and low toxicity, which make them promising candidates for applications in various fields. In this review, we summarize the latest progress in research on GQDs, focusing on their preparation via both top-down and bottom-up routes and application in fluorescence sensing of inorganic ions, organic molecules and biomaterials. This review provides insight into GQDs to inspire their further development, including their controllable preparation and use in a wider range of sensing applications, by the large community of researchers focusing on graphene.