Magnesium hydroxide (Mg(OH)2) is hailed as a cheap and biocompatible material with antimicrobial potential; however, research aimed at instilling additional properties and functionality to this material is scarce. In this work, we synthesized novel, fluorescent magnesium hydroxide nanosheets (Mg(OH)2-NS) with a morphology that closely resembles that of graphene oxide. These multifunctional nanosheets were employed as a potent antimicrobial agent against several medically relevant bacterial and fungal species, particularly on solid surfaces. Their strong fluorescence signature correlates to their hydroxide makeup and can therefore be used to assess their degradation and functional antimicrobial capacity. Furthermore, their pH-responsive change in fluorescence can potentially act as a pH probe for wound acidification, which is characteristic of healthy wound healing. These fluorescent antimicrobial nanosheets were stably integrated into biocompatible electrospun fibers and agarose gels to add functionality to the material. This reinforces the suitability of the material to be used as antimicrobial bandages and gels. The biocompatibility of the Mg(OH)2-NS for topical medical applications was supported by its noncytotoxic action on human keratinocyte (HaCaT) cells.