A method is provided for the direct synthesis by living cationic polymerization of novel polymeric materials functionalized with desirable nitrogen-containing functional groups such as terminal azido, cyano, carbonylamino, cyanato, thiocyanato or thiocarbonylamino groups. Polymerization and functionalization occur in a substantially simultaneous manner. All necessary reactants for the functionalization are present when polymerization is initiated. The nitrogen-containing functional group is provided as a part of a molecule having a release moiety which is preferably resonance stabilized or a tertiary alkyl type and which acts to aid the nitrogen-containing species in functioning as a leaving group.