A novel strategy for the simultaneous reduction and functionalization of graphene oxide (G-O) was developed using polyallylamine hydrochloride (PAAH) as a multi-functional agent. The G-O functionalization by PAAH was carried out under basic conditions to catalyze the epoxide ring opening reaction of G-O with abundant amine groups of PAAH. We found that G-O was not only functionalized with PAAH but also reduced under the reaction condition. Moreover, the synthesized PAAH-functionalized G-O sheets were soluble in water and applicable to the synthesis of nanocomposites with gold nanoparticles.