Knowledge gaps in nanomaterial fate and toxicity currently limit the ability of risk assessments to characterize the environmental implications of nanomaterials. This problem is further complicated by the lack of standardized characterization and preparation methodologies for researchers to gain the needed information to assist risk assessors. In the present study, data were generated to determine if multiwalled nanotube (MWNT) fate and toxicity are altered by engineered surface modifications or by different dispersal methods. While dissolved organic matter was a good dispersing agent of MWNTs in water, the humic acid fraction was a more effective dispersant than the fulvic acid fraction. When stabilized in organic matter, the functional group attached to the MWNT controlled its toxicity. Underivatized MWNTs induced relatively moderate toxicity to Ceriodaphnia dubia after 96 h (25 ± 19% survival at 26 mg/L), while hydrophilic groups (hydroxyl, carboxyl) reduced this toxicity (93 ± 12% survival at 48 mg/L). However, other functional groups (alkyl, amine) increased toxicity (0 ± 0% survival at <15 mg/L). In dispersal method studies, sonication of MWNTs increased fragmentation relative to magnetic stirring. The sonication treatment of MWNTs also slightly reduced the mortality of C. dubia in the water column but increased toxicity in the sediment to Leptocheirus plumulosus and Hyalella azteca. Findings in the present study indicate that nanotubes engineered for specific applications need to be managed independently and that laboratory methods to disperse and test nanotubes in bioassays need to be standardized to obtain repeatable results for comparison of materials.