Polystyrene nanocomposites with functionalized single-walled carbon nanotubes (SWNTs), prepared by the in-situ generation and reaction of organic diazonium compounds, were characterized using melt-state linear dynamic viscoelastic measurements. These were contrasted to the properties of polystyrene composites prepared with unfunctionalized SWNTs at similar loadings. The functionalized nanocomposites demonstrated a percolated SWNT network structure at concentrations of 1 vol % SWNT, while the unfunctionalized SWNT-based composites at twice the loading of SWNT exhibited viscoelastic behavior comparable to that of the unfilled polymer. This formation of the SWNT network structure for the functionalized SWNT-based composites is because of the improved compatibility between the SWNTs and the polymer matrix and the resulting better dispersion of the SWNT.