Aggregation-induced emission (AIE) has unlocked a completely new research area corresponding to application potentials of luminescent materials. Notably, carbon dots (Cdots) are emerging as well-recognized alternative to organic dyes because of their fascinating fluorescence properties. They exhibit improved emission when aggregated due to the changes in solvent polarity, higher concentration, externally added chemical species. Herein, a review on the AIE property is demonstrated with a substantial emphasis on Cdot optical property. Mechanistic overview along with application potentials of the same in sensing, optoelectronic devices, fingerprints recognition and solar concentrators are highlighted. Finally, a summary corresponding to recent developments and future prospects have been discussed.