For a sustainable circular economy, the processing of substantial agrarian waste into valuable materials would be an excellent strategy. This minimizes the cost of discarding waste while simultaneously reducing pollution and CO2 emissions. Herein, we synthesize cotton shell-derived nitrogen-doped graphene quantum dots (CS-N-GQDs) through hydrothermal synthesis. The structural, optical, morphological, and compositional properties of CS-N-GQDs are analysed using various analytical tools. The theoretical insights of CS-N-GQDs are corroborated through density functional theory (DFT) studies at the ωB97XD/6-31G(d,p) level of theory. Further, the nanomolar detection of H2O2 through optical and electrochemical sensing is performed for applications in environmental monitoring, food quality assessment, and biomedical analysis. Importantly, optical and electrochemical sensing show limits of detection of 5.34 ± 2 nM and 5.96 ± 1 nM, respectively, at a broad linear range of 10 nM to 1 mM. The possibility of detecting H2O2 using CS-N-GQDs in real-time analysis is also tested in commercial juice and beverage samples. This work reveals that cotton shells are useful in producing green and economic dual-mode optical and electrochemical sensor probes for the rapid, sensitive, and selective sensing of H2O2. Combined spectroscopic, electrochemical, and theoretical analyses provide mechanistic insights, revealing dynamic photoinduced electron-transfer quenching for optical sensing and diffusion-controlled electrocatalytic reduction for electrochemical sensing.