The unique tubular morphology of carbon nanotubes (CNTs) has triggered wide research interest. These structures can be used as nanoreactors and to create novel composites through the encapsulation of guest materials in their well-defined channels. The rigid nanotubes restrict the size of the encapsulated materials down to the nanometer and even the sub-nanometer scale. In addition, interactions may develop between the encapsulated molecules and nanomaterials and the CNT surfaces. The curvature of CNT walls causes the π electron density of the graphene layers to shift from the concave inner to the convex outer surface, which results in an electric potential difference. As a result, the molecules and nanomaterials on the exterior walls of CNTs likely display different properties and chemical reactivities from those confined within CNTs. Catalysis that utilizes the interior surface of CNTs was only explored recently. An increasing number of studies have demonstrated that confining metal or metal oxide nanoparticles inside CNTs often leads to a different catalytic activity with respect to the same metals deposited on the CNT exterior surface. Furthermore, this inside and outside activity difference varies based on the metals used and the reactions catalyzed. In this Account, we describe the efforts toward understanding the fundamental effects of confining metal nanoparticles inside the CNT channels. This research may provide a novel approach to modulate their catalytic performance and promote rational design of catalysts. To achieve this, we have developed strategies for homogeneous dispersion of nanoparticles inside nanotubes. Because researchers have previously demonstrated the insertion of nanoparticles within larger nanotubes, we focused specifically on multiwalled carbon nanotubes (MWCNTs) with an inner diameter (i.d.) smaller than 10 nm and double-walled carbon nanotubes (DWCNTs) with 1.0-1.5 nm i.d. The results show that CNTs with well-defined morphology and unique electronic structure of CNTs provide an intriguing confinement environment for catalysis.