An electrophoretic deposition (EPD) prototype was developed aiming at the continuous production of carbon nanotube (CNT) deposited carbon fiber fabric. Such multi-scale reinforcement was used to manufacture carbon fiber-reinforced polymer (CFRP) composites. The overall objective was to improve the mechanical performance and functionalities of CFRP composites. In the current study, the design concept and practical limit of the continuous EPD prototype, as well as the flexural strength and interlaminar shear strength, were the focus. Initial mechanical tests showed that the flexural stiffness and strength of composites with the developed reinforcement were significantly reduced with respect to the composites with pristine reinforcement. However, optical microscopy study revealed that geometrical imperfections, such as waviness and misalignment, had been introduced into the reinforcement fibers and/or bundles when being pulled through the EPD bath, collected on a roll, and dried. These defects are likely to partly or completely shadow any enhancement of the mechanical properties due to the CNT deposit. In order to eliminate the effect of the discovered defects, the pristine reinforcement was subjected to the same EPD treatment, but without the addition of CNT in the EPD bath. When compared with such water-treated reinforcement, the CNT-deposited reinforcement clearly showed a positive effect on the flexural properties and interlaminar shear strength of the composites. It was also discovered that CNTs agglomerate with time under the electric field due to the change of ionic density, which is possibly due to the electrolysis of water (for carboxylated CNT aqueous suspension without surfactant) or the deposition of ionic surfactant along with CNT deposition (for non-functionalized CNT aqueous suspension with surfactant). Currently, this sets time limits for the continuous deposition.