The design of novel carbon dots with ad hoc properties requires a comprehensive understanding of their formation mechanism, which is a complex task considering the number of variables involved, such as reaction time, structure of precursors or synthetic protocol employed. Herein, we systematically investigated the formation of carbon nanodots by tracking structural, chemical and photophysical features during the hydrothermal synthesis. We demonstrate that the formation of carbon nanodots consists of 4 consecutive steps: (i) aggregation of small organic molecules, (ii) formation of a dense core with an extended shell, (iii) collapse of the shell and (iv) aromatization of the core. In addition, we provide examples of routes towards tuning the core-shell design, synthesizing five novel carbon dots that all consist of an electron-dense core covered by an amine rich ligand shell.