Nanocomposites of functionalized reduced graphene oxide (FR-GO) nanosheets and a conducting polymer, poly(3,4-ethylenedioxythiophene) poly(styrenesulfonate) (PEDOT:PSS), were investigated for their applicability as stretchable transparent conducting electrode (TCE) materials. Adding FR-GO nanosheets functionalized by a surfactant, phenyl isocyanate, through the reduction of functionalized GO nanosheets into the PEDOT:PSS solution was an effective way of increasing the dispersibility of R-GO and, in turn, the electrical conductivity of the nanocomposite thin layers. A sheet resistance as low as ∼68 Ω □⁻¹ and optical transmittance of ∼86% at the wavelength of 550 nm was obtained for the nanocomposite layer with FR-GO well-dispersed in the PEDOT:PSS matrix. A patterned nanocomposite electrode formed on a pre-stretched polydimethylsiloxane substrate showed potential applicability as an excellent TCE for transparent and stretchable electronics.