The unequivocal identification of lyotropic phases in carbon nanotube suspensions has recently been announced (Science 2003, 302, 1363). Here one aspect of that study is explored in further detail. The isotropic-nematic phase transition has been observed in an aqueous dispersion of multiwall carbon nanotubes (MWNTs) using reflected polarized light microscopy. The coexistence of the two phases over a significantly wide range of concentration is attributed to the polydispersity of nanotube dimensions and straightness, the longer and thicker nanotubes packing preferentially in the anisotropic phase. Above a critical concentration, a Schlieren texture characteristic of the nematic phase is apparent in the dispersion. A sufficiently thin film of a nematic dispersion is transparent enough to enable examination in transmitted polarized light. The characteristic features of the optical texture are related to the corresponding direct FEGSEM images of the nanotubes in dried samples.