Poly(ethylene terephthalate) (PET)/multiwalled carbon nanotube (MWCNT) composites were prepared by in situ polymerization. To improve the dispersion of MWCNTs in the PET matrix, functionalized MWCNTs having acid groups (acid-MWCNTs) and acetic groups (acetic-MWCNTs) on their surfaces were used. The functional groups were confirmed by infrared spectrometry. Scanning electron microscopy showed that acetic-MWCNTs had a better dispersion in the PET matrix than pristine MWCNTs and acid-MWCNTs. A reaction between PET and acetic-MWCNTs was confirmed by a shift of the Raman G band to a higher frequency and an increase of the complex viscosity in the rheological properties. The composites containing functionalized MWCNTs showed a large increase in their tensile strengths and moduli. The values of the strengths and moduli of the PET/acetic-MWCNT composites were higher than those of the PET/acid-MWCNT composites. (C) 2007 Wiley Periodicals, Inc.