Advanced wound dressings improve wound healing by releasing antibacterial agents, accelerating wound closure, and reporting (sensing) changes in the wound’s state. The challenge with the release of antibacterial agents such as drugs, peptides, or nanoparticles is their unregulated administration. In addition, bacteria resistance to antibiotics stimulates the search for new types of antibacterial wound dressings. Here, we report a new approach to antibacterial wound dressings by utilizing a nanocolloidal hydrogel with strong Fe3+ ion sequestration capability, thus depriving bacteria of much-needed ionic iron and suppressing bacteria growth. The hydrogel was derived from cellulose nanocrystals decorated with carbon dots (C-dot/CNCs). Upon Fe3+ ion uptake by the nanofibrillar hydrogel, the photoluminescence of the hydrogel was quenched, due to adsorption of ions to the C-dot surface, thus reporting on the removal of ionic iron from the medium. The hydrogel suppressed the growth of antibiotic-resistant Gram-negative Escherichia coli, antibiotic-resistant Pseudomonas aeruginosa, and Gram-positive Staphylococcus aureus and was noncytotoxic for human fibroblasts. Wound dressings were readily fabricated using three-dimensional (3D) printing. The new mechanism of antibacterial performance of the hydrogel, its sensing capability, biocompatibility, and the capability to 3D print wound dressing patches make it a very promising material for the fabrication of advanced wound dressings.