Chemical dyes used in the textile industries are one of the major pollutants in water. Methylene blue (MB) is a commonly seen dye that creates hazardous health problems. In this article the photocatalytic degradation of MB by the nanocatalyst MoS2 (Nano-MoS2) and carbon dot (C Dots) incorporated MoS2 (Nano-CD-MoS2) is reported. The photocatalytic degradation of MB is analyzed based on the electron-hole recombination rate of the catalyst. Photoluminescence emission exhibited by the catalyst is used as a key indicator to probe the electron-hole recombination rate. Nano-MoS2 was synthesized hydrothermally at 180 0C for 8 h from ammonium tetra thiomolybdate (ATTM). C Dot was prepared following a green root from ash guard extract which later mixed with Nano-MoS2 and kept in an autoclave at a temperature 140 °C for 4 h to get Nano-CD-MoS2. The photoluminescence (PL) and photocatalytic behavior of Nano-MoS2 and Nano-CD-MoS2 and their application for water splitting and water purification are reported. The incorporation of graphene and artificial C Dot into MoS2 nanostructures are reported to increase the conductivity and active edge sites of MoS2 that enhances the photocatalytic action. Since green C Dots are eco-friendly and easily synthesizable than artificial C Dots, as a novel study, this article investigated the influence of green C Dots on the PL and photocatalytic performance of nanosized MoS2. Nano-MoS2 and Nano-CD-MoS2 exhibited both upconversion and downconversion PL; accordingly the nanostructures were termed as amphi-luminescent. The amphi-luminescence property widens the photon absorption range and hence enhances the catalytic degradation of dyes. Nano-MoS2 which exhibited lesser intensity of amphi-luminescence emission compared to Nano-CD-MoS2 showed better results in degradation of MB. C Dots may bind with the valence band electrons of MoS2, resulting in the reduction of dangling bonds. Dangling bonds can trap photo-induced excitons to hinder the rate of electron-hole recombination. So, fast electron-hole recombination occurs in Nano-CD-MoS2 than Nano-MoS2. Fast electron-hole recombination supports radiative electron-hole recombination while suppresses the non-radiative energy transfer of electrons and causes high PL intensity. However, according to the energy level diagram, Nano-MoS2 with minimal electron-hole recombination rate is more favorable for O2/O2–,.OH/ OH– and.OH/H2O reactions that facilitate MB degradation. Photocatalytic activity of catalysts were confirmed by measuring the photocurrent from a simple custom-made two-electrode water photolysis cell where the nanocatalysts were dispersed in electrolyte. Lead and steel rods were used as electrodes. Multimeter was used to measure current. Nano-MoS2 exhibited better performance with a maximum photocurrent of 141 µA. Influence of green C Dots in energy levels, PL and photocatalysis of MoS2 and mechanisms of PL and degradation of MB are thoroughly investigated in this article.