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Graphene oxide (or graphene) derived graphene quantum dots (GQDs) are the primary building blocks for nano-devices because of their superior electronic, thermal, optical and toughening (in matrix) characteristics. There are various methods to prepare GQDs where “top-down” method has been practiced widely. This is a size reduction technique from micrometer sized graphene sheets to nanometer sized (< 10 nm) quantum particles with well-confined shape and quantum confinement effect. GQDs are emerging as promising optical materials for biological applications. This review will project the detailed “top-down” method; rather such as molecular scissoring of graphene sheets to quantum dots, optical characteristics and applications.