Polyaniline self assembled from nanorods synthesized by a novel inverse microemulsion polymerization technique, is covalently grafted to reduced graphene oxide layers. Amide linkages formed between polyaniline and reduced graphene oxide is confirmed with Fourier transform infrared spectroscopy and X-ray photoelectron spectroscopy. The formation mechanism of the cube-like nanostructures self assembled from nanorods, proposed is in good agreement with the experimental results. The cube-like morphology of polyaniline is disturbed during grafting due to the weakening of π–π stacking and H-bonding interactions between the nanorods by the introduction of graphene layers. Experimental results prove significant reduction and exfoliation of graphite oxide during grafting with polyaniline. At the same linear transmittance, the polyaniline–reduced graphene oxide hybrid (20cm/GW) shows increased nonlinear absorption coefficient compared to the individual components, namely polyaniline (9.5cm/GW) and graphite oxide (5.5cm/GW). The saturation intensity of the hybrid is also decreased considerably with respect to pristine polyaniline and GO. The hybrid with good nonlinear absorption coefficient and low limiting threshold opens up the way to use the material as a good optoelectronic material.