In this study, multiwalled carbon nanotubes (MWCNTs) were compounded with the poly($varepsilon$-caprolactone) (PCL) matrix at the solution state using chloroform. For homogeneous dispersion of MWCNTs in polymer matrix, oxygen-containing groups were introduced on the surface of MWCNTs. The mechanical properties of the PCL/MWCNTs composites were effectively increased due to the incorporation of MWCNTs. The composites were characterized using scanning electron microscopy in order to obtain information on the dispersion of MWCNT in the polymeric matrix. In case of 1.2 wt% of MWCNTs in the matrix, strength and modulus of the composite increased by 12.1% and 164.3%, respectively. In addition, the dispersion of MWCNTs in the PCL matrix resulted in substantial decrease of the electrical resistivity of the composites as the MWCNTs loading was increased from 0 to 2.0 wt%. Furthermore, thermal stability of the PCL and PCL/MWCNTs-COOH composites were investigated using the data acquired from the thermogravimetric analysis. The detailed kinetics of the thermal degradation of the composites was investigated by analyzing their thermal behavior at different heating rates in a nitrogen atmosphere. Activation energy of thermal degradation was determined by using the equations proposed by Kissinger and Flynn-Wall-Ozawa. The apparent activation energy of PCL/MWCNTs-COOH composite was considerably higher than that of neat PCL.