Disclosed is a method of exfoliating a layered material (e.g., graphite and graphite oxide) to produce nano-scaled platelets having a thickness smaller than 100 nm, typically smaller than 10 nm, and often between 0.34 nm and 1.02 nm. The method comprises: (a) subjecting the layered material in a powder form to a halogen vapor at a first temperature above the melting point or sublimation point of the halogen at a sufficient vapor pressure and for a duration of time sufficient to cause the halogen molecules to penetrate an interlayer space of the layered material, forming a stable halogen-intercalated compound; and (b) heating the halogen-intercalated compound at a second temperature above the boiling point of the halogen, allowing halogen atoms or molecules residing in the interlayer space to exfoliate the layered material to produce the platelets. Alternatively, rather than heating, step (a) is followed by a step of dispersing the halogen-intercalated compound in a liquid medium which is subjected to ultrasonication for exfoliating the halogen-intercalated compound to produce the platelets, which are dispersed in the liquid medium. The halogen can be readily captured and re-used, thereby significantly reducing the impact of halogen to the environment. The method can further include a step of dispersing the platelets in a polymer or monomer solution or suspension as a precursor step to nanocomposite fabrication.