A facile and green strategy for the fabrication of fluorescent urea-doped carbon dots (N-CDs) has been explored. Significantly, the fluorescent N-CDs could recognize iodide ions (I⁻) with high selectivity, and their photoluminescence could be efficiently quenched by the addition of I⁻. The sensitivity analysis for I⁻ indicated a linear relationship in the range from 12.5 to 587 μM with the detection limit as low as 0.47 μM. Furthermore, the I⁻ induced fluorescence (FL) quenching mechanism was investigated employing a combination of techniques, including UV-vis/fluorescence spectroscopy, Density Functional Theory (DFT) calculation, TEM and time-resolved fluorescence decay measurements. The DFT calculation results demonstrated that the amino- and amide groups of N-CDs play a significant role in iodide recognition through the formation of multiple N–H⋯I⁻, C–H⋯I⁻ and C(O)N–H⋯I⁻ interactions with I⁻. The TEM experiment confirmed the aggregation process when I⁻ was added to the N-CDs solution. Moreover, the radiative decay rate of N-CDs, which was first measured and reported the kinetic behaviors of the FL-quenching process, decreased from 3.30 × 10⁷ s⁻¹ to 1.95 × 10⁷ s⁻¹ after the coordination with I⁻ ions. The reduced lifetime demonstrated that the excited energy dissipation led to a dynamic quenching process. Therefore, such carbon materials can function as effective fluorescent switches for the selective detection of I⁻ ions.