The direct in situ observation of fullerene formation encapsulated within a graphene ridge has been made possible using an aberration corrected transmission electron microscope (AC-TEM). An atom-by-atom mechanism was proposed based on in situ AC-TEM observations. First principle calculations found a continuous energy decrease upon the addition of carbon atoms to the edge of the graphene flakes, which mimics the fullerene growth steps and supports the atom-by-atom mechanism. The ridged graphene structure worked as a container for pinning small graphene flakes and capturing carbon atoms, which increased the growth probability of the fullerene structure within the small encapsulated space.