Graphene is a monolayer of tightly packed carbon atoms that possesses many interesting properties and has numerous exciting applications. In this work, we report the antibacterial activity of two water-dispersible graphene derivatives, graphene oxide (GO) and reduced graphene oxide (rGO) nanosheets. Such graphene-based nanomaterials can effectively inhibit the growth of E. coli bacteria while showing minimal cytotoxicity. We have also demonstrated that macroscopic freestanding GO and rGO paper can be conveniently fabricated from their suspension via simple vacuum filtration. Given the superior antibacterial effect of GO and the fact that GO can be mass-produced and easily processed to make freestanding and flexible paper with low cost, we expect this new carbon nanomaterial may find important environmental and clinical applications.