Graphene oxide (GO) holds high promise for diagnostic and therapeutic applications in nanomedicine but reportedly displays immunotoxicity, underlining the need for developing functionalized GO with improved biocompatibility. This study describes adverse effects of GO and amino‐functionalized GO (GONH2) during Caenorhabditis elegans development and ageing upon acute or chronic exposure. Chronic GO treatment throughout the C. elegans development causes decreased fecundity and a reduction of animal size, while acute treatment does not lead to any measurable physiological decline. However, RNA‐Sequencing data reveal that acute GO exposure induces innate immune gene expression. The p38 MAP kinase, PMK‐1, which is a well‐established master regulator of innate immunity, protects C. elegans from chronic GO toxicity, as pmk‐1 mutants show reduced tissue‐functionality and facultative vivipary. In a direct comparison, GONH2 exposure does not cause detrimental effects in the wild type or in pmk‐1 mutants, and the innate immune response is considerably less pronounced. This work establishes enhanced biocompatibility of amino‐functionalized GO in a whole‐organism, emphasizing its potential as a biomedical nanomaterial.