The sidewalls of multiwalled carbon nanotubes (MWCNTs) were decorated with CdS nanoparticles using a mild two-step approach, with in situ polymerized thiophene (PTh) acting as an interlinker. Extensive characterization of the materials has been carried out using transmission electron microscopy, selected area electron diffraction, X-ray diffraction, thermal gravimetric analysis, ultraviolet-visible absorption spectroscopy and photoluminescence spectroscopy. Optical limiting (OL) studies have been performed using the open Z-scan technique at the laser wavelengths of 532 and 1064 nm. The MWCNT-PTh-CdS system shows an enhanced OL effect in comparison to the pristine MWCNTs, particularly at 1064nm. Possible underlying mechanisms are proposed based on the results of nonlinear scattering measurements.