In recent years, carbon nanofibers have been investigated as a suitable reinforcement for cementitious composites to yield novel multifunctional materials with improved mechanical, electrical, magnetic, and self-sensing behavior. Despite several studies, the interactions between carbon nanofibers and Portland cement hydration products are not fully understood, with significant implications for the mechanical response and the durability at the macroscopic lengthscale. Thus, the research objective is to investigate the influence of carbon nanofibers on the nanostructure and on the distribution of hydration products within Portland cement paste. Portland cement w/c = 0.44 specimens reinforced with 0.0 wt%, 0.1 wt%, and 0.5 wt% CNF by mass fraction of cement are cast using a novel synthesis procedure. A uniform dispersion of carbon nanofibers (CNF) via a multi-step approach: after pre-dispersing carbon nanofibers using ultrasonic energy, the carbon nanofibers are further dispersed using un-hydrated cement particles in high shear mixing and mechanical stirring steps. High-resolution scanning electron microscopy analysis shows that carbon nanofibers fill nanopores and connect calcium–silicate hydrates (C–S–H) grains. Grid nano-indentation testing shows that Carbon nanofibers influence the probability distribution function of the local packing density by inducing a shift towards higher values, η = 0.76–0.93. Statistical deconvolution analysis shows that carbon nanofibers result in an increase in the fraction of high-density C–S–H by 6.7% from plain cement to cement + 0.1 wt% CNF and by 10.7% from plain cement to cement + 0.5 wt% CNF. Moreover, CNF lead to an increase in the C–S–H gel porosity and a decrease in both the capillary porosity and the total porosity. Based on scratch testing, adding 0.1 wt% CNF yields a 4.5% increase in fracture toughness and adding 0.5 wt% CNF yields a 7.6% increase in fracture toughness. Finally, micromechanical modelling predicts an increase of respectively 5.97% and 21.78% in the average Young’s modulus following CNF modification at 0.1 wt% CNF and 0.5 wt% CNF levels.