AbstractPolyester nanocomposites based on poly(butylene terephthalate) (PBT) and carbon nanotube (CNT) were prepared by simple melt blending using a twin‐screw extruder. There is significant dependence of the thermal, rheological, and mechanical properties of the PBT nanocomposites on the concentration and dispersion state of CNT. The storage and loss moduli of the PBT nanocomposites increased with increasing frequency, and this enhancing effect was more pronounced at lower frequency region. The nonterminal behavior for the PBT nanocomposites was attributed to the nanotube–nanotube or polymer–nanotube interactions, and the dominant nanotube–nanotube interactions at high CNT content resulted in the formation of the interconnected network‐like structures of CNT in the PBT nanocomposites. The incorporation of a small quantity of CNT into the PBT matrix can substantially improve the mechanical properties, the heat distortion temperature, and the thermal stability of the PBT nanocomposites. The unique character of CNT dispersed in the PBT matrix resulted in the physical barrier effect against the thermal decomposition, leading to the improvement in the thermal stability of the PBT nanocomposites. This study also provides a design guide of CNT‐reinforced PBT nanocomposites with a great potential for industrial uses. © 2009 Wiley Periodicals, Inc. J Appl Polym Sci, 2009