In this study, a novel metal oxide–reduced graphene oxide (RGO) composite structure, denoted as a “nanobubble-decorated RGO sphere,” was fabricated and characterized for potential use in Li+-ion batteries. The nanobubble-decorated RGO sphere consists of an RGO sphere uniformly decorated with hollow metal oxide nanopowder. Reduction of the composite powder prepared by spray pyrolysis under H2/Ar gas mixture formed RGO spheres decorated with metal nanopowders. The metal nanopowders were transformed into hollow metal oxide nanopowders, or nanobubbles, by the nanoscale Kirkendall diffusion process. Cobalt oxide nanobubble-decorated RGO spheres, prepared as the first target material, showed excellent Li-storage properties. The cobalt oxide–RGO composite powders, tested at the current density of 2Ag−1 for 200 cycles before and after the nanoscale Kirkendall diffusion, showed discharge capacities of 932 and 1156mAhg−1, respectively; their capacity retentions measured from the second cycle onward were 89% and 99%, respectively.