Poly(N-isopropylacrylamide) microgels (PNIPAM MGs) incorporated with photoluminescent gold nanodots (Au NDs) have been prepared and employed for the detection of mercury ions (Hg(2+)). Each of the PNIPAM MGs (hydrodynamic diameter 615 ± 15 nm) contains several Au NDs (diameter 1.8 ± 0.2 nm) in the Au ND-PNIPAM MGs. Like Au NDs, Au ND-PNIPAM MGs exhibit an absorption band at 375 nm that is assigned for ligand to metal charge transfer mixed with metal centered (ds/dp) states and photoluminescence at 520 nm originated from Au ND/polynuclear gold(I)-thiolate (core/shell) complexes. Purification of Au ND-PNIPAM MGs relative to Au NDs is much easier through a simple centrifugation/wash process. On the basis of Hg(2+)-induced photoluminescence quenching due to the formation of Au-Hg amalgam and formation of Au ND-PNIPAM MGs aggregates, the signal response of Au ND-PNIPAM MGs against Hg(2+) concentration is linear over a range from 2 to 20 nM (r = 0.9945). This selective approach provides limits of detection for Hg(2+) (at a signal-to-noise ratio of 3) of 1.9 and 1.7 nM in phosphate buffer solutions (5 mM, pH 7.0) with and without containing 500 mM NaCl, respectively. This selective and sensitive Au ND-PNIPAM MG probe has been applied to the determination of the concentration of Hg in a representative fish sample, showing its practical potential for monitoring of Hg levels in complicated biological and environmental samples.