Polypyrrole was chemically functionalized with phthalocyanine (FePcTSA) derivative. The modified polymer with varying contents of functional material is synthesized and thoroughly characterized by UV-Vis. spectroscopy, FT-IR, atomic absorption spectroscopy, TGA and X-ray photoelectron spectroscopy techniques. The polypyrrole (PPy) functionalization reaction is monitored online using UV-Vis. spectroscopy and the kinetics of the reaction is derived for the virgin PPy formation and phthalocyanine incorporated PPy (PPy-FePcTSA). The catalytic effect of the phthalocyanine species over pyrrole monomer is evidenced from the rate of the reaction. The thermal stability of the material is improved for the modified PPy as compared to virgin PPy. The electrical conductivity of the PPy-FePcTSA materials is dependent on the concentration of the incorporated phthalocyanine. © 2011 by Nova Science Publishers, Inc. All rights reserved.