Multiwall carbon nanotube (CNT) spun yams were subjected to gamma-irradiation in an oxygen rich environment, followed by the application of epoxy to form CNT/epoxy composite yams with a high CNT fraction. The method for fabrication of the CNT/polymer composite yarns was presented, and the effect of gamma-irradiation on the mechanical performance of the pure CNT spun yams and their epoxy composite yarns were studied. The gamma-irradiated CNT yarns were also characterized by X-ray Photoelectron Spectroscopy and Raman spectroscopy. The results of this study have demonstrated that the gamma-irradiation is an effective micro-engineering tool to improve mechanical properties of the CNT spun yam and its epoxy composite yam.