A simple, efficient and low-cost method to synthesize zirconia nanopowders dispersed with graphene by wet ball milling was reported in this paper. The raw material for ball milling is cheap graphite powder rather than expensive graphene. Graphite powders were exfoliated into graphene nanosheets (GNSs) in the process of ball milling, as a result of strong shear forces and moderate impact forces between graphite powders, milling balls, and ZrO2 nanoparticles. The mixed powders were milled for 3, 10, 20, 30, 40, and 50h, respectively. Moreover, the morphology, composition and structure of the mixed powders milled were characterized by X-ray diffraction, scanning electron microscopy, X-ray photoelectron spectroscopy, Raman spectroscopy, Fourier transform infrared spectroscopy, and field emission transmission electron microscopy. Results showed that the graphite powders were exfoliated effectively, and the GNSs were dispersed uniformly in the zirconia simultaneously. The presence of zirconia nanoparticles significantly improved the efficiency of ball milling exfoliation.