This study demonstrates a one-step synthesis for the preparation of both adenosine monophosphate (AMP)-stabilized colloidal gold nanoparticles (AMP-Au NPs) and fluorescent gold nanoclusters (AMP-Au NCs). The dominant role of AMP:AuCl molar ratios in the formation of diverse nanosized Au products was proved. The size, the structure and the unique structure-dependent optical properties of the NPs and NCs were determined based on the results of numerous spectroscopic (UV-vis, fluorescence, infrared, x-ray photoelectron), high resolution electron microscopy (HRTEM) and dynamic light scattering (DLS) techniques. Stabile AMP-Au NPs with diameter of ca. 11nm and ultra-small AMP-Au NCs having blue fluorescence (λ=480nm) were identified. In addition, the AMP-Au NCs have been utilized to develop a selective sensor for the detection of Fe ions in aqueous medium based on fluorescence quenching. Several essential metal ions and anions have been tested but our results clearly supported that dominant quenching was observed only for Fe ions. Based on the determined limit of detection (LOD=2.0μM) our system is capable of detecting Fe ions in drinking water. The Stern-Volmer constants (K) and various thermodynamic parameters (ΔG, ΔH°, ΔS°, ΔC) of the quenching process have also been determined by the Stern-Volmer fitting of the fluorescence data in order to better understand the quenching mechanism.