The invention incorporates new processes for the chemical modification of carbon nanotubes. Such processes involve the derivatization of multi- and single-wall carbon nanotubes, including small diameter (ca. 0.7 nm) single-wall carbon nanotubes, with diazonium species. The method allows the chemical attachment of a variety of organic compounds to the side and ends of carbon nanotubes. These chemically modified nanotubes have applications in polymer composite materials, molecular electronic applications, and sensor devices. The methods of derivatization include electrochemical induced reactions, thermally induced reactions (via in-situ generation of diazonium compounds or preformed diazonium compounds), and photochemically induced reactions. The derivatization causes significant changes in the spectroscopic properties of the nanotubes. The estimated degree of functionality is ca. 1 out of every 20 to 30 carbons in a nanotube bearing a functionality moiety. Such electrochemical reduction processes can be adapted to apply site-selective chemical functionalization of nanotubes. Moreover, when modified with suitable chemical groups, the derivatized nanotubes are chemically compatible with a polymer matrix, allowing transfer of the properties of the nanotubes (such as, mechanical strength or electrical conductivity) to the properties of the composite material as a whole. Furthermore, when modified with suitable chemical groups, the groups can be polymerized to form a polymer that includes carbon nanotubes.