Active vibration control of a smart FG (functionally graded) cylindrical shell conveying fluid in thermal environment is studied theoretically by using a laminated piezoelectric actuator. Velocity feedback control law is implemented to activate the piezoelectric actuator. Considering the electric-thermo-fluid-structure interaction effect, a nonlinear dynamic model of the smart fluid-conveying FG cylindrical shell is developed based on Hamilton’s principle and von-Karman type geometrical nonlinear relationship. The inviscid, incompressible, isentropic and irrotational fluid is coupled into governing equations using the linearized potential theory. The Galerkin’s method is used to obtain the nonlinear governing equations of motion of the coupled system. The multiple time scales approach is applied to solve the resulting governing equations for analysing the nonlinear dynamic characteristics of the coupled system. The influence of fluid flow velocity, feedback control gains of piezoelectric voltage, external excitation and material properties of FGM on the frequency-response curves of system are investigated. The results indicate that the piezoelectric voltage is an effective controlling parameter for vibration control of the system, and the flow velocity can effect significantly the vibration amplitude and nonlinearity of the coupled system.