Abstract: A method of forming a composite of embedded nanofibers in a polymer matrix is disclosed. The method includes incorporating nanofibers in a plastic matrix forming agglomerates, and uniformly distributing the nanofibers by exposing the agglomerates to hydrodynamic stresses. The hydrodynamic said stresses force the agglomerates to break apart. In combination or additionally elongational flow is used to achieve small diameters and alignment. A nanofiber reinforced polymer composite system is disclosed. The system includes a plurality of nanofibers that are embedded in polymer matrices in micron size fibers. A method for producing nanotube continuous fibers is disclosed. Nanofibers are fibrils with diameters 100 nm, multiwall nanotubes, single wall nanotubes and their various functionalized and derivatized forms. The method includes mixing a nanofiber in a polymer; and inducing an orientation of the nanofibers that enables the nanofibers to be used to enhance mechanical, thermal and electrical properties.