Effects of environmental dielectric screening on excitons in carbon nanotubes are studied within a k Á p scheme and a continuum model. They are shown to be sensitive to the effective distance between the nanotube and the dielectric medium relative to the diameter. For material surrounding the nanotube, the band gap decreases with the increase of the dielectric constant, but the energy of the ground exciton exhibits only a slight decrease for effective distance comparable to interlayer spacing of bulk graphite. The binding energy of excited exciton states disappears rapidly. For dielectric material inside the nanotube, effects are much weaker and excited exciton states remain as bound states even for very large dielectric constant.