Functionalization and dispersion of graphene sheets are of crucial importance for their end applications. Chemical functionalization of graphene enables this material to be processed by solventassisted techniques, such as layer-by-layer assembly, spin-coating, and filtration. It also prevents the agglomeration of single layer graphene during reduction and maintains the inherent properties of graphene. Therefore, a detailed review on the advances of chemical functionalization of graphene is presented. Synthesis and characterization of graphene have also been reviewed in the current article. The functionalization of graphene can be performed by covalent and noncovalent modification techniques. In both cases, surface modification of graphene oxide followed by reduction has been carried out to obtain functionalized graphene. It has been found that both the covalent and noncovalent modification techniques are very effective in the preparation of processable graphene. However, the electrical conductivity of the functionalized graphene has been observed to decrease significantly compared to pure graphene. Moreover, the surface area of the functionalized graphene prepared by covalent and non-covalent techniques decreases significantly due to the destructive chemical oxidation of flake graphite followed by sonication, functionalization and chemical reduction. In order to overcome these problems, several studies have been reported on the preparation of functionalized graphene directly from graphite (one-step process). In all these cases, surface modification of graphene can prevent agglomeration and facilitates the formation of stable dispersions. Surface modified graphene can be used for the fabrication of polymer nanocomposites, super-capacitor devices, drug delivery system, solar cells, memory devices, transistor device, biosensor, etc. (C) 2012 Elsevier Ltd. All rights reserved.