A large-scale, environment-friendly method to produce water-soluble reduced graphene oxide by using glutathione as a reducing and stabilization agent has been developed. The results of UV–visible absorption spectroscopy, X-ray photoelectron spectroscopy, atomic force microscopy, and transmission electron microscopy indicate that graphene oxide is reduced to graphene nanosheets which are single-layers and exhibit good dispersion in water. A reaction mechanism is proposed. The electrochemical properties of the graphene nanosheets as electrode materials for supercapacitors are studied by cyclic voltammetry and galvanostatic charge/discharge tests. A maximum specific capacitance of 238Fg−1 in a 1M H2SO4 electrolyte has been obtained. Meanwhile, the material shows excellent long-term cycle stability along with the retention of 97% for specific capacitance after 1000cycle tests.