A chemical strategy is attempted to modify graphene for its facilitated dispersion in poly(ε‐caprolactone) (PCL) matrix. Herein, graphite oxide is subjected to sequential treatment with phenyl isocyanate and vitamin C (VC) to yield graphene nanosheets (iG‐VC). It is noteworthy that following the reduction treatment, iG‐VC graphene sheets exfoliate within the PCL matrix and show appreciable interfacial compatibility with PCL matrix in organic solvent by virtue of improved polarity from isocyanate treatment. The tensile yield strength and Young's modulus of the PCL/iG‐VC composite exhibit pronounced enhancement as compared to neat PCL, despite of mere composition of graphene sheets. The tensile yield stress of composite is increased notably to reach 18.6 MPa at 3 wt% graphene sheets as compared to neat PCL. Likewise, Young's modulus of composite is observed to increase from 370 to 470 MPa at 5 wt% graphene sheets. Moreover, the crystallization temperature (Tc) and crystallinity of PCL increase significantly upon incorporation of small amount of iG‐VC. Ultimately, functional role of iG‐VC graphene sheets is demonstrated in enhancing electrical conductivity of PCL‐based nanocomposites. The plausible mechanisms are also proposed to explain the increased Tc, improved mechanical property, and improved electrical conductivity of PCL/iG‐VC composite.