Coupling atmospheric-pressure low-temperature plasmas to electrochemical reactors enables the generation of highly reactive species at plasma–liquid interfaces. This type of plasma electrochemical reactor (PEC) has been used to synthesize fluorescent nitrogen-doped graphene quantum dots (NGQDs), which are usable for multifunctional applications in a facile, simple, and sustainable way. However, the synthesis mechanism remains poorly understood, as well as the location of synthesis. To research these issues, we present an in situ diagnostics study on liquid phase chemistry during the PEC synthesis of NGQDs from chitosan. Monitoring of the photoluminescence and UV-VIS absorption at different depths in the reaction medium during plasma treatment reveals that the NGQD production initiates at the plasma–liquid interface but its completion and/or accumulation occurs at a few millimetres depth below the interface, where the liquid ceases to flow convectively, as determined by particle image velocimetry. Our study provides insights into the plasma synthesis of fluorescent GQDs/NGQDs from carbon precursors that may prove useful for achieving the scalability of PEC processes up to continuous-flow or array reactors.