A cost-effective and highly efficient method was proposed for preparing reduced graphene (rEG) by modified Hummers approach. The influence of ratio of KMnO4 to graphite, oxidation time and oxidation temperature on oxidative degree of graphite oxide (GO) was investigated by x-ray diffraction (XRD) and Fourier Transform Infrared Spectroscopy (FTIR). The thermal exfoliated graphene (EG) was characterized with transmission electron microscopy (TEM), FTIR, Raman spectrum and Brunauer–Emmett–Teller (BET) method. The EG was treated for 4 h at 800 °C with H2/Ar mixed atmosphere (15/85, v%) to remove the residual functional groups. The characterization of x-ray photoelectron spectroscopy (XPS) showed that rEG contains less functional groups than EG, which shows the C/O ratio increased from 10.6 (EG) to 34.71 (rEG). The results indicate that treating EG with a mixed H2/Ar atmosphere (15/85, v%) remarkably removes residual functional groups of EG, supplying a simple and feasible approach with large scale production of reduced graphene.