Eu3+-modified carbon dots (C-dots), 3–5 nm in diameter, were prepared, functionalized, and stabilized via a one-pot polyol synthesis. The role of Eu2+/Eu3+, the influence of O2 (oxidation) and H2O (hydrolysis), as well as the impact of the heating procedure (conventional resistance heating and microwave (MW) heating) were explored. With the reducing conditions of the polyol at the elevated temperature of synthesis (200–230 °C), first of all, Eu2+ was obtained resulting in the blue emission of the C-dots. Subsequent to O2-driven oxidation, Eu3+-modified, red-emitting C-dots were realized. However, the Eu3+ emission is rapidly quenched by water for C-dots prepared via conventional resistance heating. In contrast to the hydroxyl functionalization of conventionally-heated C-dots, MW-heating results in a carboxylate functionalization of the C-dots. Carboxylate-coordinated Eu3+, however, turned out as highly stable even in water. Based on this fundamental understanding of synthesis and material, in sum, a one-pot polyol approach is established that results in H2O-dispersable C-dots with intense red Eu3+-line-type emission.