Conventional inorganic semiconductor quantum dots (QDs) have numerous applications ranging from energy harvesting to optoelectronic and bio-sensing devices primarily due to their unique size and shape tunable band-gap and also surface functionalization capability and consequently, have received significant interest in the last few decades. However, the high market cost of these QDs, on the order of thousands of USD/g and toxicity limit their practical utility in many industrial applications. In this context, graphene quantum dot (GQD), a nanocarbon material and a new entrant in the quantum-confined semiconductors could be a promising alternative to the conventional toxic QDs due to its potential tunability in optical and electronic properties and film processing capability for realizing many of the applications. Variation in optical as well as electronic properties as a function of size, shape, doping and functionalization would be discussed with relevant theoretical backgrounds along with available experimental results and limitations. The review deals with various methods available so far towards the synthesis of GQDs along with special emphasis on characterization techniques starting from spectroscopic, optical and microscopic techniques along with their the working principles, and advantages and limitations. Finally, we will comment on the environmental impact and toxicity limitations of these GQDs and their hybrid nanomaterials to facilitate their future prospects.