An intumescent flame retardant, poly(diaminodiphenyl methane spirocyclic pentaerythritol bisphosphonate) (PDSPB) has been covalently grafted onto the surfaces of multiwalled carbon nanotubes (MWNTs) to obtain MWNT-PDSPB and according nanocomposites were prepared via melt blending. After high density PDSPB (65 wt %) were attached to the MWNTs, core-shell nanostructures with MWNTs as the hard core and PDSPB as the soft shell were formed. The resultant MWNT-PDSPB was soluble and stable in polar solvents, such as DMF. The optical microscopy and TEM results showed that the functionalized MWNTs can achieve better dispersion in ABS matrix. The linear viscoelastic behavior indicated that MWNT-PDSPB can form network structure at very low nanotube loading than un-functionalized MWNTs. The results of flammability showed that better flame retardancy was obtained for ABS/MWNT-PDSPB nanocomposites due to the better dispersion of MWNT-PDSPB in ABS matrix. The flammability of the composites is strongly dependent on the network structure of nanotubes which reduces the diffusion of volatile combustible fragments generated by polymer degradation which diffuse towards the surface of the burning polymer to evaporate to feed the flame. The grafting of intumescent flame retardant of PDSPB can improve both the dispersion of nanotubes in polymer matrix and flame retardancy of the nanocomposites.