In this work, graphene quantum dots (GQDs) with an average size of 3.9 nm were synthesized using rice husk biomass as the raw material via a facile one-step one-pot hydrothermal method. The size and morphology of the rice husk-derived GQDs were characterized by transmission electron microscopy and atomic force microscopy. The GQDs exhibit bright blue photoluminescence under 365 nm ultraviolet irradiation and can be well dispersed in water. The GQDs reach the strongest photoluminescence excitation intensity at ca. 360 nm under an emission wavelength of 466 nm, suggesting that the GQDs were oxidized with oxygenous groups attached. The quenching tests showed that the synthesized GQDs were highly and selectively sensitive toward Fe3+ ions and thus can potentially be used for Fe3+ sensing.