A novel label-free system for the sensitive fluorescent detection of deoxyribonuclease I (DNase I) activity has been developed by utilizing DNA-templated silver nanocluster/graphene oxide (DNA-AgNC/GO) nanocomposite. AgNC is first synthesized around C-rich template DNA and the resulting DNA-AgNC binds to GO through the interaction between the extension DNA and GO. The resulting DNA-AgNC/GO would show quite reduced fluorescence signal because the fluorescence from DNA-AgNCs is quenched by GO. In the presence of DNase I, however, it degrades the DNA strand within DNA/RNA hybrid duplex probe employed in this study, consequently releasing RNA which is complementary to the extension DNA. The released free RNA then extracts DNA-AgNC from GO by hybridizing with the extension DNA bound to GO. This process would restore the quenched fluorescence, emitting highly enhanced fluorescence signal. By employing this assay principle, DNase I activity was reliably identified with a detection limit of 0.10U/ml which is lower than those from previous fluorescence-based methods. Finally, the practical capability of this assay system was successfully demonstrated by its use to determine DNase I activity in bovine urine.