Abstract: Metal corrosion causes significant economic losses, safety issues, and environmental pollution. Hence, its prevention is of immense research interest. Carbon dots (CDs) are a new class of zero-dimensional carbon nanomaterials, which have been considered for corrosion protection applications in recent years due to their corrosion inhibition effect, fluorescence, low toxicity, facile chemical modification, and cost-effectiveness. This study provides a comprehensive overview of the synthesis, physical and chemical properties, and anticorrosion mechanisms of functionalized CDs. First, the corrosion inhibition performance of different types of CDs is introduced, followed by discussion on their application in the development of smart protective coatings with self-healing and/or self-reporting properties. The effective barrier formed by CDs in the coatings can inhibit the spread of local damage and achieve self-healing behavior. In addition, diverse functional groups on CDs can interact with Fe³⁺ and H⁺ ions generated during the corrosion process; this interaction changes their fluorescence, thereby demonstrating self-reporting behavior. Moreover, challenges and prospects for the development of CD-based corrosion protection systems are also presented.