The formation of a novel hybrid material, NanoBuds, single-walled carbon nanotubes (CNTs) with covalently attached fullerenes was investigated in a ferrocene–carbon monoxide system. Fullerenes and CNTs were simultaneously formed by carbon monoxide disproportionation on the surface of iron particles in the presence of etching agents such as H 2 O and CO 2 . On the basis of parametric investigations and in situ sampling of the product from different locations in the reactor the mechanisms for NanoBud formation are discussed.