In the present study, we report a fabrication of dual-mode carbon coated gadolinia C@Gd₂O₃ particles by a facile hydrothermal synthesis method without using any organic solvents. The prepared C@Gd₂O₃ particles have a core–shell structure and a narrow size distribution in the range of 261±27 nm. The fluorescent properties of the prepared C@Gd₂O₃ particles were accessed by a room-temperature photoluminescence study, while the longitudinal relaxivity (r₁) was examined by using a clinical 1.5 T MRI scanner. A murine fibroblast L-929 cell line was used to examine the cytotoxicity and capability of the prepared C@Gd₂O₃ particles for the fluorescent labeling. The obtained results show that the prepared C@Gd₂O₃ particles could be used as a dual-mode contrast agent for magnetic resonance and fluorescence imaging.