Graphene is a single layer of sp(2)-bonded carbons that has unique and highly attractive electronic, mechanical, and thermal properties. Consequently, the potential impact of graphene and its derivatives (e.g., graphene oxide, GO) on human and environmental health has raised considerable concerns. In this study, we have carried out a systematic investigation on cellular effects of GO nanosheets and identified the effect of fetal bovine serum (FBS), an often-employed component in cell culture medium, on the cytotoxicity of GO. At low concentrations of FBS (1%), human cells were sensitive to the presence of GO and showed concentration-dependent cytotoxicity. Interestingly, the cytotoxicity of GO was greatly mitigated at 10% FBS, the concentration usually employed in cell medium. Our studies have demonstrated that the cytotoxicity of GO nanosheets arises from direct interactions between the cell membrane and GO nanosheets that result in physical damage to the cell membrane. This effect is largely attenuated when GO is incubated with FBS due to the extremely high protein adsorption ability of GO. The observation of this FBS-mitigated GO cytotoxicity effect may provide an alternative and convenient route to engineer nanomaterials for safe biomedical and environmental applications.