Biosensor based on the inhibition of enzymes has been used for the detection of organophosphorous compounds wherein amperometic method has been employed. Carbon nanotubes (CNT) has been grown over YNi 3 alloy hydrides and purified for further use. The high surface area and the acidic sites created during the purification of CNT with oxidizing acids have been exploited for the adsorption and entrapment of the enzyme acetylcholine esterase. In the present work, conducting polymer polypyrrole has been uniformly coated over the CNT surface using chemical oxidative technique. The nanocomposite was characterized by Scanning electron microscopy (SEM) and High resolution transmission electron microscopy (HRTEM). In the present report high catalytic activity of CNT towards the electroxidation of thiocholine has been utilized for the detection of Organophosphorous compound paraoxon. Developed biosensor uses the principal of acetylcholinesterase inhibition by nerve agent and hence reduction in oxidation current of thiocholine for the detection of paraoxon. Synthesized PPY-MWNT nanocomposite has been used for the electrode preparation over GC electrode. Due to high porosity of polymer and high electrical conductivity of CNT, a detection level of 3 nM paraoxon could be achieved. The details of fabrication of the sensor and the dependence of the sensitivity have been discussed. Copyright © 2010 American Scientific Publishers All rights reserved.