Abstract We investigated the switching of resistance between two discrete values, known as random telegraph noise (RTN), observed in carbon nanotube peapod transistors [single‐walled carbon nanotubes (SWNTs), C60‐peapods, and Cs‐encapsulated SWNTs (so‐called Cs‐peapods)]. By analyzing the features of the RTN, we suggest that this noise for SWNTs is due to the random transition of defects between two metastable states, activated by inelastic scattering with ballistic electrons. The noise for C60‐peapods (Cs‐peapods) is attributed to the motion of C60s (Cs) in the nanotubes.