Multiwalled carbon nanotube/Polyacrylonitrile (MWNT/PAN) composite nanofibers were prepared by electrospinning technique, whereby functionalized MWNTs (F-MWNTs) and pristine MWNTs (P-MWNTs) were used as reinforcing materials. The F-MWNTs were functionalized by Friedel-Crafts acylation, which introduced aromatic amine (COC(6)H(4)-NH(2)) groups onto the sidewall. The diameter range of the PAN nanofibers was 400-100 +/- 50 nm. The beads formation was also observed when the amounts of MWNTs were increased in the PAN solution. The bead formation in F-MWNT/PAN composite nanofibers was less as compared to P-MWNT/PAN. The MWNTs were embedded within nanofibers and were well oriented along the nanofiber axis, as confirmed by transmission electron microscopy. The mechanical and thermal properties of the PAN nanofibers were improved by the incorporation of MWNTs.