Multicolor carbon dots (C-dots) have excellent performance characteristics, high photoluminescence efficiency, ease of fabrication and low toxicity. C-dots have been used in a wide variety of fields including bioimaging, biomedicine, photocatalysis and environmental monitoring. The mass production of multicolor CDs using low-cost, facile methods is an important issue for future industrial applications. In this article, we reported a simple and highly effective way to prepare the multicolor C-dots and use them to detect heavy metal iron ions. Hydrochar acquired from food waste processed with hydrothermal carbonization (HTC) was used as the carbonaceous material for this process. Four colors of C-dots were obtained and included blue, green, yellow and red. These multicolor C-dots could be used as fluorescence probes with unique selectivity to detect the Fe³⁺ ion. The luminescence response ranged from 1 to 50 μM with a correlation coefficient of 0.9968. This discovery not only shows the high value-added products which can be obtained from food waste but can also lead to new developments in carbonaceous materials which can be used as “green resources”.