We report the induction of thermally stable vertical alignment of nematic liquid crystal, 4-cyano-4′-pentylbiphenyl (5CB), in a planar anchored cell by doping with eco-friendly carbon dots (CDs, diameter ∼7–8 nm), investigated through thermal, optical, electro-optical and dielectric spectroscopic techniques. Cross-polarized optical textures and voltage-dependent optical transmission measurements demonstrate the induction of vertical alignment of CDs-5CB composites with concentration of CDs (≥0.3 wt%) in planar anchored sample cells at room temperature. Moreover, the frequency-bias-concentration dependent dielectric studies done also confirms the induced vertical alignment. For instance, the relative dielectric permittivity measured on CDs-5CB composites (CDs ≥ 0.3 wt%) in planar anchored sample cells at bias voltage of 0 V and 30 V DC are almost equal and the presence of a short axis molecular relaxation at 0 V confirms the induced vertical alignment. The concentration and bias dependence of short axis molecular relaxation frequency are also discussed. It appears that CDs are able to align 5CB molecules vertically at the substrate by overcoming the pre-existing planar anchoring. Such induced alignment would propagate through the bulk of sample cell because of the coherence length of nematic liquid crystal molecules and eventually the whole sample obtains vertical alignment. We anticipate the great utility of these composites in the production of eco-friendly liquid crystal displays and other photonic devices, sensors, etc.