The potential use of functionalized carbon nanotubes (f-CNTs) for drug and gene delivery to the central nervous system (CNS) and as neural substrates makes the understanding of their in vivo interactions with the neural tissue essential. The aim of this study was to investigate the interactions between chemically functionalized multi-walled carbon nanotubes (f-MWNTs) and the neural tissue following cortical stereotactic administration. Two different f-MWNT constructs were used in these studies: shortened (by oxidation) amino-functionalized MWNT (oxMWNT-NH3+) and amino-functionalized MWNT (MWNT-NH3+). Parenchymal distribution of the stereotactically injected f-MWNTs was assessed by histological examination. Both f-MWNT were uptaken by different types of neural tissue cells (microglia, astrocytes and neurons), however different patterns of cellular internalization were observed between the nanotubes. Furthermore, immunohistochemical staining for specific markers of glial cell activation (GFAP and CD11b) was performed and secretion of inflammatory cytokines was investigated using real-time PCR (qRT-PCR). Injections of both f-MWNT constructs led to a local and transient induction of inflammatory cytokines at early time points. Oxidation of nanotubes seemed to induce significant levels of GFAP and CD11b over-expression in areas peripheral to the f-MWNT injection site. These results highlight the importance of nanotube functionalization on their interaction with brain tissue that is deemed critical for the development nanotube-based vector systems for CNS applications.