We synthesised a polyacrylamide (PAA) hydrogel filled with fluorescent carbon quantum dots (CQDs) for environmental sensing application. The obtained PAA@CQDs composite was characterised using scanning electron microscopy, Fourier transform infrared spectroscopy, X-ray photoelectron spectroscopy, photoluminescence (PL) spectroscopy, time correlated single photon counting and UV-visible spectroscopy. In the PAA@CQDs composite, CQDs were shown to retain their high PL properties. Being immersed into FeCl3 solutions, PAA@CQDs samples demonstrated intensive PL quenching because of Fe3+ ions absorption. The limit of the Fe3+ ions detection was determined to be 0.124 μM. We showed the formation of non-PL complex between CQDs and Fe3+ ions, ensuring static mechanism of the PAA@CQDs PL quenching.