Carbon dots (CDs) are fluorescent carbon nanomaterials that are considered for applications in optoelectronics, sensorics, and biofields due to their low-cost and robust synthesis, and versatile optical properties. Herein, it is demonstrated how chemical functionalization of hydrophilic or amphiphilic CDs with polyethylene glycol influences their energy level structure and hence the emission properties. Functionalization of CDs with polyethylene glycol results in an increase in emission quantum yield: from 30505 including the highest occupied molecular orbital and the lowest unoccupied molecular orbital energies, are dependent on chemical composition and size of CDs. Moreover, polyethylene glycol-functionalized CD can form good quality films based on their composite with polyvinylcarbazole (PVK), that together with intense emission is crucial for light-emitting diode (LED) fabrication. By studying spectral properties of fabricated CD-LEDs, it is shown that their electroluminescence (EL) originates from mixed energy levels of CD and PVK in the composite, resulting in the shifting of the EL maximum from blue to green during several seconds of LED operation. The optimized CD-LEDs show brightness up to 2600 cd m−2.