Poly(trimethylene terephthalate) (PTT) nanocomposites containing multi-walled carbon nanotubes (MWNTs) were prepared using a melt-blending process. Acrylic acid-grafted PTT (PTT-g-AA) and multihydroxyl-functionalized MWNTs (MWNTs-OH) were used to improve the compatibility and dispersibility of MWNTs within the PTT matrix. The nanocomposites were characterized morphologically by transmission electron microscopy and chemically using Fourier transform infrared absorbance, C-13 solid-state nuclear magnetic resonance, and ultraviolet-visible spectroscopy. The thermal and mechanical properties of the blends were also evaluated. The functionalized PTT-g-AA/MWNT-OH blend showed markedly enhanced thermal and mechanical properties due to the formation of ester bonds from the condensation of the carboxylic acid groups of PTT-g-AA with the hydroxyl groups of MWNT-OH. The optimal proportion of MWNT-OH in the blends was 1 wt %. In excess of this amount, compatibility between the organic and inorganic phases was compromised. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 114: 1633-1642, 2009