Chemical etching of gold by thiols has been known to be capable of generating nonluminescent gold(I) complexes, e.g., in size-focusing synthesis of atomically precise gold nanoclusters (GNCs). These nonluminescent gold(I) complexes have usually been considered as useless or worthless byproducts. This study shows a promising potential of thiol etching of GNCs to prepare novel water-soluble and phosphorescent gold(I) materials for sensing application. First, cysteamine-induced etching of GNCs is used to produce nonluminescent oligomeric gold(I)-thiolate complexes. Then, cadmium ion induces the aggregation of these oligomeric complexes to produce highly water-soluble ultrasmall intra-aggregates. These intra-aggregates can phosphoresce both in dilute aqueous solutions and in the solid phase. Studies on the effect of pH on their phosphorescent emission reveal the importance of the interaction between the amino groups of the ligands and cadmium ion for their phosphorescent emission property. Furthermore, Cu(2+) ion is found to quickly quench the phosphorescent emission of the intra-aggregates and simultaneously cause a Cu(2+)-concentration-dependent peak wavelength shift, enabling the establishment of a novel colorimetric sensor for sensitive and selective visual sensing of Cu(2+).