AC electric field was used to align functionalized carbon nanofibers (CNFs), carboxylic acid-functionalized CNFs (O-CNFs) and amine-functionalized CNFs (A-CNFs), in an epoxy resin. The resulting composites were characterized for dispersion and alignment structure as well as for their mechanical and electrical properties in the CNF alignment direction. Optical images of the composites revealed uniform distribution and alignment of the CNFs in the direction of the electric field. Due to the similarity in the alignment structure, it was observed that alignment of the functionalized CNFs was independent of the functional groups attached to the CNFs. Compression tests (parallel to the direction of the aligned A-CNFs) of A-CNF/epoxy composites showed an increase of 19% in compressive modulus and 9% in compressive strength at a CNF concentration of 4.5 wt.%, with respect to the neat composite. Electrical resistivity of composites measured parallel to the direction of aligned CNFs (containing up to 4.5 wt.% O-CNFs and A-CNFs) were found to be approximately three orders of magnitude lower than composites with non-aligned CNFs. The electrical resistivity percolation threshold for composites with aligned O-CNFs and A-CNFs occurred at approximately 0.75 wt.%. Discussion regarding the contribution of CNF type towards the mechanical and electrical properties is also presented. © 2011 Elsevier Ltd. All rights reserved.