The cytotoxic response of cells in culture is dependant on the degree of functionalization of the single-walled carbon nanotube (SWNT). After characterizing a set of water-dispersible SWNTs, we performed in vitro cytotoxicity screens on cultured human dermal fibroblasts (HDF). The SWNT samples used in this exposure include SWNT-phenyl-SO3H and SWNT-phenyl-SO3Na (six samples with carbon/-phenyl-SO3X ratios of 18, 41, and 80), SWNT-phenyl-(COOH)2 (one sample with carbon/-phenyl-(COOH)2 ratio of 23), and underivatized SWNT stabilized in 1% Pluronic F108. We have found that as the degree of sidewall functionalization increases, the SWNT sample becomes less cytotoxic. Further, sidewall functionalized SWNT samples are substantially less cytotoxic than surfactant stabilized SWNTs. Even though cell death did not exceed 50% for cells dosed with sidewall functionalized SWNTs, optical and atomic force microscopies show direct contact between cellular membranes and water-dispersible SWNTs; i.e. the SWNTs in aqueous suspension precipitate out and selectively deposit on the membrane.