In the present study, for carbon coating we used carbohydrate (dextrose) to prepare the monodisperse and non-toxic ultrasmall carbon coated gadolinium oxide nanoparticles (C@Gd2O3 NPs) through a simple one-pot process in a solution. The C@Gd2O3 NPs to form stable colloidal suspensions in water and enhance biocompatibility. Besides, the C@Gd2O3 have a core-shell structure and a narrow size distribution in the range of 5nm. A clinical 1.5T MRI scanner was used to examine the longitudinal relaxivity (r1). The resultant products can be used as T1 MRI contrast agent. Under the irradiation of UV light at 365 nm, the carbon nanoparticles show sky-blue color and show green color under Confocal Laser Scanning Microscope at 525nm. Therefore, C@Gd2O3 can be used as T1 MRI agent and fluorescent imaging agent.