Graphene quantum dots (GQDs) were synthesized using watermelon rind waste as a photoluminescent (PL) agent for ferric ion (Fe${}^{3+}$) detection and in vitro cellular bio-imaging. A green and simple one-pot hydrothermal technique was employed to prepare the GQDs. Their crystalline structures corresponded to the lattice fringe of graphene, possessing amide, hydroxyl, and carboxyl functional groups. The GQDs exhibited a relatively high quantum yield of approximately 37%. Prominent blue emission under UV excitation and highly selective PL quenching for Fe${}^{3+}$ were observed. Furthermore, Fe${}^{3+}$ could be detected at concentrations as low as 0.28 $\mathsf{\mu }$M (limit of detection), allowing for high sensitivity toward Fe${}^{3+}$ detection in tap and drinking water samples. In the bio-imaging experiment, the GQDs exhibited a low cytotoxicity for the HeLa cells, and they were clearly illuminated at an excitation wavelength of 405 nm. These results can serve as the basis for developing an environment-friendly, simple, and cost-effective approach of using food waste by converting them into photoluminescent nanomaterials for the detection of metal ions in field water samples and biological cellular studies.