Ongoing extensive research on carbon nanotubes (CNTs) has been facilitated by unique physicochemical properties and wide opportunities the CNTs offer for the new field of nanotechnology. Recent studies have shown that for efficient use of the remarkable properties of CNTs, particularly in the design of multifunctional materials for engineering and biomedical applications, they need to be surface modified by attachment of functional groups for improving solubility, processing, and compatability with host materials. It has been shown that fluorination is an efficient way to modify and control the surface properties of CNTs. For instance, fluorine functional groups on the sidewalls of CNTs effectively assist in unroping the nanotube bundles and in dispersion in alcohols and other polar solvents. Weakness of the CF bond and solubility of fluorinated nanotubes (fluoronanotubes) provide an opportunity for the synthesis of a variety of nanotube derivatives by substitution of fluorine through wet chemistry methods. This approach has been applied to preparation of a series of amino, amide, hydroxyl, thiol, and carboxyl group‐terminated derivatives. The activated sidewall CC π bonds in fluoronanotubes also permit a solution‐phase chemistry leading to addition reactions of free radicals, carbenes, dienes, and other reactive molecules. Functional groups chemically attached to the CNTs effectively assist in the dispersion of CNTs in polymer matrices, crucial for nanocomposites fabrication. “Tailored” chemical modifications are particularly useful for creating multiple sites for covalent bonding of nanotubes to polymer matrices for the enhancement of mechanical properties of epoxy, polyethylene, polypropylene, and nylon. Fluorinated CNTs represent a new family of nanoscale fluorocarbon materials. They enable various applications of functionalized CNTs, derived from fluoronanotubes, particularly in nanocomposites, sensors, nanoelectronic devices, nanoengineered drug delivery systems, and nanolubricants.