Shear-induced destruction and formation of conductive and mechanical filler networks formed by multi-wall carbon nanotubes in polycarbonate melts were investigated by simultaneous time-resolved measurements of electrical conductivity and rheological properties under steady shear and in the quiescent melt. The steady shear experiments were performed at shear rates between 0.02 and 1 rad/s and for nanotube concentrations ranging from 0.5 to 1.5 wt%. The influence of thermo-mechanical history on the state of nanotube dispersion and agglomeration was studied in detail. For melts with well-dispersed nanotubes a shear-induced insulator-conductor transition was observed, which is explained by the agglomeration of nanotubes under steady shear and the formation of an electrical conductive network of interconnected agglomerates. Simultaneously, a drastic decrease of the shear modulus (G* = G' + iG '') during steady shear was observed, which can be related to a reduction of mechanical reinforcement due to agglomeration of dispersed nanotubes. These findings indicate a substantial difference in the nature of "electrical" and "mechanical" network and contradict earlier assumptions that steady (or transient) shear is always destructive for the conductive filler network in highly viscous polymer composites. It was also shown that after a certain time of steady shear the filler network asymptotically reaches its steady state characterized by the constant electrical conductivity and shear modulus of the composite melt. Such asymptotic behaviour of composite properties was experimentally shown to be related to the interplay of the destructive and build-up effects of steady shear. For modelling of the electrical conductivity in presence of steady shear a kinetic equation was proposed for filler agglomeration with shear-dependent destruction and build-up terms. This equation was coupled to the generalized effective medium (GEM) approximation for insulator-conductor transition. (C) 2009 Elsevier Ltd. All rights reserved.