We developed nanosized, reduced graphene oxide (nano-rGO) sheets with high near-infrared (NIR) light absorbance and biocompatibility for potential photothermal therapy. The single-layered nano-rGO sheets were similar to 20 nm in average lateral dimension, functionalized noncovalently by amphiphilic PEGylated polymer chains to render stability in biological solutions and exhibited 6-fold higher NIR absorption than nonreduced, covalently PEGylated nano-GO. Attaching a targeting peptide bearing the Arg-Gly-Asp (RGD) motif to nano-rGO afforded selective cellular uptake in U87MG cancer cells and highly effective photoablation of cells in vitro. In the absence of any NIR irradiation, nano-rGO exhibited little toxicity in vitro at concentrations well above the doses needed for photothermal heating. This work established nano-rGO as a novel photothermal agent due to its small size, high photothermal efficiency, and low cost as compared to other NIR photothermal agents including gold nanomaterials and carbon nanotubes.