Most of the reports suggest that liquid exfoliated WS2-QDs are unstable; therefore the need of present day is to develop a novel synthesis route for producing long-term stable WS2-QDs. Herein, we report a bottom-up single-step hydrothermal growth of in situ functionalized blue fluorescent WS2-QDs with stable fluorescence in aqueous media without subsequent treatments. Presence of various functional groups over the surface of f-WS2-QDs provides high solubility and stability to f-WS2-QDs in aqueous media preserving its fluorescence. Further, photoluminescence property of f-WS2-QDs has been employed to devise an optical sensor with a high sensitivity (K-D similar to 10(4) M-1) and selectivity for ferric (Fe3+) ions. Under the optimal condition, response of the sensor is found to be linear in the range of 0-55 mu M with a limit of detection (LOD) of 1.32 mu M, which is within the maximum permissible level of Fe3+ (similar to 5.4 mu M) in human drinking water by the USEPA. Further, we have also carried out a detailed evaluation on fluorescence quenching kinetics of f-WS2-QDs. Nonlinear behavior of S-V plot and TRPL measurements suggest that quenching is a mixed phenomenon of dynamic as well as static processes. Finally we have proposed a mechanism for fluorescence quenching of f-WS2-QDs in the presence of Fe3+.