In this paper, highly blue-luminescent nitrogen-doped graphene quantum dots (N-GQDs) are synthesized by a facile one-step hydrothermal treatment of citric acid and dicyandiamide. A quantum yield (QY) as high as 32.4% is achieved at an excitation wavelength of 350 nm. It is found that such N-GQDs with a high QY can be used as efficient fluorescent probes for the detection of glutathione (GSH). In the detection, the photoluminescence (PL) intensity of the N-GQDs could be quenched by mercuric ions due to the strong electrostatic interaction and electron transfer between N-GQDs and Hg(II). Upon the addition of GSH, the PL intensity of N-GQDs can be recovered owing to the preferred combination of Hg(II) and GSH by forming a Hg(II)–S bond. Under optimal conditions, this fluorescence turn-on sensing system exhibits excellent sensitivity and selectivity for GSH determination with a detection limit of 87 nM. Importantly, the N-GQDs–Hg(II) system can be successfully applied for visualizing the intracellular GSH in live HeLa cells due to bright luminescence, low cytotoxicity and good biocompatibility.