In this study, the non-toxic carbon coated ultrasmall gadolinium oxide nanoparticles(C@Gd2O3) were prepared through a simple one-pot synthesis method in a solution by using carbohydrate as starting precursor. The carbon coated ultrasmall GNPs to enhance biocompatibility and water solubility. Furthermore, the C@Gd2O3 have a core-shell structure. The resultant products can be used as T1 MRI contrast agent. Under the irradiation of UV light at 365 nm, the carbon nanoparticles show green fluorescence. Therefore, C@Gd2O3 can be used for fluorescent imaging in addition to T1 MRI.