Abstract Large-scale synthesis and applications of graphene-encapsulated metal catalysts remain a great challenge since it is difficult to control the thickness of graphene layers. In this study, graphene-encapsulated Ni nanoparticles (Ni@Gr) were fabricated via in-situ growth method. Steam-assisted control was carried out to decrease the graphene layer number. The layer-controlled Ni@Gr catalyst consisted of Ni core and graphene shell. The anchored metal was well defended against oxidation or acid etching. In addition, the influence of steam-gasification temperature on the nature of catalysts was also investigated. The catalyst obtained via steam-assisted control at 800 °C (Ni@Gr800) possessed excellent textural features, such as thinner graphene shell, more defects on the surface. Consequently, Ni@Gr800 catalyst presented superior initial activity and durability in the steam reforming of ethanol, especially at 550 °C. By density functional theory calculations, the presence of defects improved the adsorption energy of all reaction species. The carbonaceous deposition was the primary reason for catalyst deactivation. Textural features of Ni@Gr800 contributed to the formation of carbon filaments, which facilitated coke gasification on the catalyst. This work provides a procedure for controlling the graphene layer number of catalysts with graphene as the covering, and an approach to fabricate defects on the graphene surface.