Facile and efficient reduction of graphene oxide (GO) and novel applications of the reduced graphene oxide (RGO) based materials are of current interest. Herein, we report a novel and facile method for the reduction of GO by using a biocompatible reducing agent dithiothreitol (DTT). Stabilization of DTT by the formation of a six-membered ring with internal disulfide linkage upon oxidation is responsible for the reduction of GO. The reduced graphene oxide is characterized by several spectroscopic and microscopic techniques. Dispersion of RGO in DMF remained stable for several weeks suggesting that the RGO obtained by DTT-mediated reduction is hydrophobic in nature. This method can be considered for large scale production of good quality RGO. Treatment of RGO with hemin afforded a functional hemin-reduced graphene oxide (H-RGO) hybrid material that exhibited remarkable protective effects against the potentially harmful peroxynitrite (PN). A detailed inhibition study on PN-mediated oxidation and nitration reactions indicate that the interaction between hemin and RGO results in a synergistic effect, which leads to an efficient reduction of PN to nitrate. The RGO also catalyzes the isomerization of PN to nitrate as the RGO layers facilitate the rapid recombination of .NO2 with FeIV=O species. In the presence of reducing agents such as ascorbic acid, the FeIV=O species can be reduced to FeIII, thus helping to maintain the PN reductase cycle.