Carbon dots (C-dots), the latest member of the renowned carbon nanomaterials family, have attracted enormous attention for their extraordinary properties. Polyethylene glycol (PEG), as a nontoxic, non-immunogenic and high water soluble polymer, is widely used for the PEGylation of protein/peptide drugs and traditional nanoparticles. Recently, PEG has been heavily investigated regarding their unique capability in enhancing C-dots fluorescence emission, elucidating C-dots formation and photoluminescence mechanism. In this article, we summarized recent excitements of PEGs as passivation agents, solvents/matrices and sole carbon precursors in the synthesis of C-dots. We also discussed the formation mechanism of PEG-derived C-dots as well as their applications in various fields. Current challenges, and perspectives on the future trends of PEG-derived C-dots are also highlighted and discussed.