Composites of carbon quantum dots (CQDs) are important materials to utilize the optical properties of CQDs in diverse applications including photoluminescence-based sensing and LED phosphors. Combining pre-prepared CQDs with a polymeric matrix usually causes changes in the optical properties of CQDs due to unavoidable aggregation. Recently, the preparation of composites based on in-situ formed CQDs has been debated to overcome the aggregation limits of the conventional mixing methods. Herein, we have demonstrated the synthesis of homogeneous CQDs composites by simple thermal annealing blends of aluminum hydroxide (AlOH), citric acid (CA), and urea (URA). Transmission electron microscopy (TEM), X-ray diffraction, and Raman spectroscopy studies revealed the formation of individual CQDs with a diameter of about 2–9 nm dispersed homogeneously over the AlOH matrix. The composites have a broad excitation band centered at about 360 nm and exhibit excitation-dependent photoluminescence which was similar to that of hydrothermally synthesized CQDs from CA and URA. The photoluminescent intensity of the composite was stable to UV irradiation and responded selectively to Cu(II) ion demonstrating its potential application in Cu(II) sensing.