<p>Carbon dots (CDs) are nanoscale carbon-based nanomaterials with tunable fluorescence, excellent aqueous solubility, and favorable biocompatibility. Among green synthesis strategies, microbial systems have gained growing attention due to their scalable cultivation, intrinsic heteroatom doping, and metabolite-driven surface functionalization. Microbial CD formation proceeds through hydrothermal or microwave-assisted carbonization of microbial biomass and extracellular polymers, driving hydrolysis, dehydration, aromatization, and graphitization to yield sp²/sp³ carbon cores enriched with hydroxyl, carboxyl, and amine groups. Characterization studies consistently report nanoscale size, graphitic lattice fringes, and excitation-dependent fluorescence, though quantum yields and photostability remain inconsistent. Applications span biosensing, antimicrobial therapy, bioimaging, catalysis, packaging, and agriculture, with studies demonstrating nanomolar-level detection sensitivity, selective heavy-metal discrimination, and inhibition of biofilms and drug-resistant pathogens. Biocompatibility assessments show high mammalian cell viability at application-relevant concentrations, although long-term biosafety data remain limited and require further investigation. By consolidating mechanistic insights, performance benchmarks, and comparative critique, this review positions microbial CDs as a distinct and underexplored branch of green nanomaterials with strong potential for biomedical and environmental translation. To our knowledge, this is the first comprehensive review exclusively focused on microbial carbon dots, systematically comparing bacteria, fungi, and yeasts as sustainable nanocarbon platforms.</p>