The charge transport and magnetoresistance (MR) of polyaniline (PANI)/carbon nanotube (CNT) composite with increasing degree of chemical functionalized CNT have been studied from 300 to 4.2 K and magnetic field up to 5 T. The variation of resistivity with temperature is higher for fCNT/PANI compare to CNT/PANI composite and it increases with increasing degree of functionalization of CNT. The resistivity variation with temperature is explained by Mott’s VRH and Efros–Shklovskii model. The chemical functionalization of CNT increases the electron- electron interaction in the composites. At low temperature (T=4.2 K) all the fCNT/PANI composites show positive MR although CNT/PANI shows negative. Lower degree of functionalized CNT/PANI composite (6 h) shows MR transition from positive to negative with increasing temperature (T ≥10 K) but higher degree of fCNT/PANI composites (48 h and 96 h) show no crossover in MR at measured temperature range. The transition of MR in fCNT/PANI composites is explained by NSS model. The increasing degree of functionalization increases the dipolar interaction between fCNT and PANI which leads to change in sign of tunneled electron scattering amplitude in charge transport that give rise to the MR transition in system.