In a reaction where a lower hydrocarbon is subjected to direct decomposition by using a catalyst to produce a functional nanocarbon and hydrogen, the lower hydrocarbon is subjected to the reaction in an coexistent gas comprising low concentration of oxidizing gas, reducing gas or a mixture thereof. The precursor of functional nanocarbon produced on the catalyst and amorphous carbon secondarily produced on the catalyst react with the coexistent gas so that being removed from the catalyst, making it possible to prevent the drop of conversion with time on stream due to the inhibition of the reaction by the precursor and by-product. In the case where the raw material of lower hydrocarbon is biogas, the coexistent gas can be easily contained in methane by lowering purification degree of methane.