Nanosized tin oxide particles have shown excellent performance when used as anode material in lithium ion batteries. To further improve their electrochemical properties, functionalized carbon nanotubes were introduced during the homogenous precipitation synthesis. Various material characterization techniques such as XRD, SEM, TEM, TGA and BET were performed to check their crystalline, micro- and nano-structure, thermal stability and surface area. Compared with blank tin oxide nanoparticles, much finer tin oxide nanoparticles with higher surface area were observed with the presence of functional carbon nanotubes. It is proposed that functional carbon nanotubes play an important role for nanoparticles' nucleation, growth, coagulation processes. The potential application of this composite in lithium ion batteries is discussed.