Surface oxygen-containing defects of graphene nanosheets (G NSs) are important for the nonlinear optical (NLO) properties in optoelectric devices. G NSs with different surface oxygen-containing defects are successfully tuned by a chemical reduction process, and are characterized by several experimental measurements of morphology and structure and by spectroscopy. Their NLO properties are measured with the Z-scan technique and the NLO transmission method using a 30 picosecond single-pulse laser source at 532 nm wavelength. Their NLO susceptibility is enhanced 11.8 times (from 0.38 × 10-12 esu to 4.5 × 10-12 esu) with the decrease in the density of surface oxygen-containing groups, while it is reduced 7.2 times (2.7 × 10-12 esu) with a further decrease in oxygen. Accordingly, the nonlinear absorption coefficient of graphene is increased from 0.51 cm GW-1 to 5.90 cm GW-1, and then decreased to 3.41 cm GW-1, indicating that the NLO response of graphene NSs should be weakened whether the component of surface oxygen-containing groups is too large or too small. The local field effect arising from surface oxygen-containing groups and isolated sp2 clusters is the dominant mechanism for the NLO improvement, while the connection of small sp2 clusters depresses the optical nonlinearity. An evolution from two-photon absorption to saturable absorption with the decrease of surface oxygen concentration is obtained. The intensity-related NLO absorption and refraction in NSs are also discussed. Tuning the surface oxygen-containing defects of graphene is a useful way to enhance the optical nonlinearity for potential applications in devices.