Multi-walled carbon nanotube (MWNT) reinforced poly(ethylene terephthalate) (PET) composites are studied. To increase the interfacial interactions between PET and MWNTs, the MWNTs are functionalized with bishydroxy-ethylene-terephthalate (BHET). The functionalized MWNTs are melt blended into PET matrix using a twin screw extruder. The amount of MWNTs loaded in PET matrix ranges from 0.5 to 2.0 wt%. After compounding and spinning, the filaments are post-drawn and annealed. To verify the chemical modifications of carbon nanotubes, Raman, $^1H$ NMR, XPS, TGA and FE-SEM are used. The nanocomposites are also analyzed with DSC, TGA, and UTM. These tests show that crystallization temperature and thermal degradation temperature increase due to the functionalized MWNTs. Also, tensile test shows that yield strength and toughness increase more than 30% with addition of only 1 wt% of MWNTs. These results show that the introduction of BHET onto the MWNTs is a very effective way in manufacturing MWNT/PET composite.