In the present work, single-walled carbon nanotubes were dispersed within the matrix of carbon fabric reinforced epoxy composites in order to develop novel three phase carbon/epoxy/single-walled carbon nanotube composites. A combination of ultrasonication and high speed mechanical stirring at 2000 rpm was used to uniformly disperse carbon nanotubes in the epoxy resin. The state of carbon nanotube dispersion in the epoxy resin and within the nanocomposites was characterized with the help of optical microscopy and atomic force microscopy. Pure carbon/epoxy and three phase composites were characterized for mechanical properties (tensile and compressive) as well as for thermal and electrical conductivity. Fracture surfaces of composites after tensile test were also studied in order to investigate the effect of dispersed carbon nanotubes on the failure behavior of composites. Dispersion of only 0.1 wt% nanotubes in the matrix led to improvements of 95% in Young's modulus, 31% in tensile strength, 76% in compressive modulus and 41% in compressive strength of carbon/epoxy composites. In addition to that, electrical and thermal conductivity also improved significantly with addition of carbon nanotubes.