Multiwalled carbon nanotubes (MWCNTs) were functionalized under helium/air plasma and the surface characteristics were compared with that of chemical functionalization. Changes in surface functional groups of MWCNTs due to plasma/chemical treatment were estimated by using temperature programmed decomposition (TPD), elemental analysis, Raman spectroscopy and BET surface area analysis. Raman spectroscopic studies highlighted that chemical functionalization increases the degree of disorder for MWCNTs when compared to plasma treatment. TPD also confirmed that air plasma treatment leads to the highest number of acidic groups on the surface that decomposes to evolve carbon dioxide. The modified MWCNTs were used as additional reinforcements to fabricate carbon fiber reinforced plastics (CFRPs). It has been observed that air plasma treated MWCNTs improved the tensile and flexural strength of C-epoxy composites significantly as compared to conventional chemical functionalization, whereas the best performance of air plasma treated MWCNTs is due to higher acid functional groups on the surface, which improves interface compatibility between the MWCNTs to the epoxy matrix. © 2015 The Royal Society of Chemistry.