We report on the enhancement of magnetic properties of multiwalled carbon nanotubes (MWNTs) functionalized with a gadolinium based supramolecular complex. By employing a newly developed synthesis technique we find that the functionalization method of the nanocomposite enhances the strength of magnetic interaction leading to a large effective moment of 15.79 μB and nonsuperparamagnetic behaviour unlike what has been previously reported. Saturating resistance at low temperatures is fitted with the numerical renormalization group formula verifying the Kondo effect for magnetic impurities on a metallic electron system. Magnetoresistance shows devices fabricated from aligned gadolinium functionalized MWNTs (Gd-Fctn-MWNTs) exhibit spin-valve switching behaviour of up to 8%. This study highlights the possibility of enhancing magnetic interactions in carbon systems through chemical modification, moreover we demonstrate the rich physics that might be useful for developing spin based quantum computing elements based on one-dimensional (1D) channels.