This work reports an eco-friendly hydrothermal approach for the synthesis of hexagonal NaCeF4:Tb3+/Eu3+ nanophosphors. The phase, morphology and optical properties were characterized by Powder X-ray diffraction (PXRD), field emission scanning electron microscopy (FE-SEM), transmission electron microscopy (TEM), Fourier transform infrared (FT-IR) spectroscopy and photoluminescence (PL) spectroscopy respectively. Herein, the as-synthesized nanophosphor was functionalized with amine rich polyethylenimine (PEI) resulting in development of a luminescent nanoprobe bearing dual sensing functions for hazardous nitroaromatics and heavy metal ions. The strong photoluminescence emission of Eu3+ ions was selectively quenched upon addition of toxic analytes at concentrations from 10 to 100 ppm due to complex formation between the analytes and PEI functionalized nanostructure. The synthesized nanomaterial shows sharp emission peaks at 493, 594, 624, 657 and 700 nm. Significantly, the peak at 594 nm shows a noticeable quenching effect on addition of toxic analytes to the aqueous solution of the nanocrystals. The nanophosphors are sensitive and efficient for the PA and Fe3+ ion detection with an LOD of 1.32 ppm and 1.39 ppm. The Stern-Volmer (SV) quenching constant (K SV) is found to be 2.25 × 105 M-1 for PA and 3.8 × 104 M-1 for Fe3+ ions. The high K SV value and low LOD suggest high selectivity and sensitivity of the nanosensor towards PA and Fe3+ ions over other analytes. Additionally, a reduced graphene oxide and nanophosphor based nanocomposite was also synthesized to investigate the role of energy transfer involving delocalized energy levels of reduced graphene oxide in regulating the luminescence properties of the nanophosphor. It was observed that PEI plays central role in inhibiting the quenching effect of reduced graphene oxide on the nanophosphor.