This Account focuses on the most recent and systematic efforts in the area of functionalization chemistry of the single-wall carbon nanotubes (SWNTs) which utilizes direct fluorination for the preparation of "fluoronanonotubes" and their subsequent derivatization. The results obtained prove that the addition of fluorine drastically enhances the reactivity of the nanotube side walls. The use of this strategy as a versatile tool for preparation and manipulation of SWNTs with variable side-wall functionalities has been demonstrated. The functionalized SWNTs have shown an improved solubility in selected solvents and significantly altered electrical, mechanical, and optical properties. An overview of new synthetic methods for preparation and a discussion of characterization data for the functionalized SWNTs are provided.