Sustainable and renewable sources of nanomaterial synthesis are a demanding approach. This work provides new insight into the versatile applications of materials derived from vermicompost. The report explains the simultaneous conversion of vermicompost to hydrophilic and stable carbon quantum dots (CDs) and hydrochar. The as-prepared CDs exhibit broad range emission spectrum from blue (400) to red (600 nm) with excitation dependent emission phenomenon. The films prepared using the CDs showed higher cellular uptake and intracellular localization. The FTIR results supported the existence of hydroxyl, amine, carboxylate and carbonyl groups on the surfaces of the CD. The zeta potential value of CDs was − 38.5. The ion absorption was tested for different cations and was maximum for Fe3+ ions, even for micromolar solutions. The hydrochar produced was used for adsorption of methylene blue dye from water and it was found that 80% of dye was removed after 12 h. of treatment. Thus, we suggest vermicompost as a promising alternative for nanomaterial synthesis.