Chemical “toolbox” methods for the covalent functionalization of single-wall carbon nanotubes (SWNTs) and nanosize (∼2–10 nm) diamond powders have been developed. These methods involve direct fluorination, organic free radical additions, fluorine displacement reactions in fluoronanotubes, and fluoronanodiamond producing amino, hydroxyl, and carboxyl group-terminated derivatives. By using this chemistry, a variety of biologically active molecules can be covalently attached to carbon nanostructures, including a shortened nanotubes. The incorporation of amino-terminated SWNTs into epoxy polymer matrices has been achieved and substantial mechanical reinforcement demonstrated. The overview of these recent results is presented.