Multi-walled carbon nanotubes (MWNTs) were functionalized by incubating in Fe³⁺ solution for the purpose of improving its selectivity and sorption capacity to cadmium. High resolution transmission electron microscopy, Raman spectroscopy, X-ray diffraction and surface charge analysis demonstrated that the MWNTs were decorated by a layer of iron phosphate. In a neutral medium (pH 6), the iron phosphate coated carbon nanotubes (NT-FP) offer a much improved sorption capacity of 32.68 mg g⁻¹ for cadmium over 6.72 mg g⁻¹ by bare carbon nanotubes after oxidation. The bare carbon nanotubes generally exhibit non-specific adsorption for various species, while the NT-FP composites provide very high selectivity to cadmium against complex sample matrix components, i.e., the tolerant limit for coexisting species were 5–100 fold improved. The NT-FP composites were packed into a mini-column for on-line selective preconcentration of cadmium with detection by electrothermal atomic absorption spectrometry. A 100% sorption was achieved at pH 6, and 50 μL of aqueous mixture of 0.002 mol L⁻¹ H₃PO₄ and 0.1 mol L⁻¹ NH₄NO₃ gives rise to a recovery of 77%. With a sample volume of 1000 μL, an enhancement factor of 31.2 is obtained, along with a detection limit of 1.3 ng L⁻¹ (3σ, n = 11) and a RSD of 2.2% (0.1 μg L⁻¹, n = 11) within a linear calibration range of 0.003–0.2 μg L⁻¹. The procedure is validated by determining cadmium in two certified reference materials (GBW08608 and GBW07404) and environmental water samples.