Carbon dots (CDs) are an emerging class of photoluminescent material. Their unique optical properties arise from the discrete energy levels in their electronic states, which directly relate to their crystalline and chemical structure. It is expected that when CDs go through structural changes via chemical reduction or thermal annealing, their energy levels will be altered, inducing unique optoelectronic properties such as solid-state photoluminescence (PL). However, the detailed structural evolution and how the optoelectronic characteristics of CDs are affected remain unclear. Therefore, it is of fundamental interest to understand how the structure of CDs prepared by hydrothermal carbonisation (HTC) rearranges from a highly functionalised disordered structure into a more ordered graphitic structure. In this paper, detailed structural characterisation and in situ TEM were conducted to reveal the structural evolution of CDs during the carbonisation process, which have demonstrated a growth in aromatic domains and reduction in oxidation sites. These structural features are correlated with their near-infrared (NIR) solid-state PL properties, which may find a lot of practical applications such as temperature sensing, solid-state display lighting and anti-counterfeit security inks.