AbstractAqueous zinc‐iodine batteries (AZIBs) are very promising energy storage systems owing to their safety, reliability, large specific capacity, and durable lifespan. However, the sluggish iodine redox kinetics and polyiodides shuttle effect severely impedes their wider application. Addressing these challenges, this study develops a new multifunctional nanoreactor integrating “Trap‐Adsorption‐Catalysis” advantages, which features the electron‐rich cobalt (Co) nanoparticles embedded in porous activated carbon (AC). Benefiting from the integrated advantages of trap‐adsorption‐catalysis behavior in the nanoreactor, this novel system enables the fast iodine (I2/I‐) conversion by enhanced kinetics, achieving high utilization of iodine and corrosion‐free zinc anode without producing polyiodides. In situ UV–vis spectroscopy, theoretical calculation combined with electrochemical analysis demonstrates that the Co@AC nanoreactor reduces the adsorption energy and conversion energy barrier of iodine species, and accelerates the conversion of polyiodides to improve the electrochemical properties. Notably, the Co@AC/I2 cathode delivers an outstanding rate capability of 221.1 and 102.5 mA h g−1 at the current density of 0.5 and 25C with high CE over >99.9%, respectively, low self‐discharge rate over 96h and high energy efficiency (EE) of 89.2% at 5.0C over 1000 cycles. These self‐discharge and EE properties are the best among AZIBs systems with Co‐based host cathodes ever reported.