Multi-walled carbon nanotubes (MWCNTs) are modified by polycarbosilane derived SiC to improve the dispersion of MWCNTs in the polymer matrix. Unmodified and modified MWCNTs are dispersed in PEI/hydroxyl terminated PDMS(HTSR) blend by melt mixing. TEM and FESEM images shows better dispersion of SiC coated MWCNTs in the blend matrix when compared with pure MWCNTs. Thermal stability of the SiC coated MWCNTs added nanocomposite improved drastically than that of the pure MWCNTs. Compared with pure PEI/HTSR binary blend and unmodified MWCNTs/PEI/HTSR ternary blend, the storage modulus, tensile modulus, and tensile strength of SiC coated MWCNTs/PEI/HTSR blend increased, due to the better dispersion of the modified MWCNTs in polymer matrix. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 119: 3574-3581, 2011