The objective of the present study was to investigate changes in the structural, textural, and surface properties of tubular halloysite under heating, which are significant in the applications of halloysite as functional materials but have received scant attention in comparison with kaolinite. Samples of a purified halloysite were heated at various temperatures up to 1400°C, and then characterized by X-ray diffraction, electron microscopy, Fourier-transform infrared spectroscopy, thermal analysis, and nitrogen adsorption. The thermal decomposition of halloysite involved three major steps. During dehydroxylation at 500–900°C, the silica and alumina originally in the tetrahedral and octahedral sheets, respectively, were increasingly separated, resulting in a loss of long-range order. Nanosized (5–40 nm) γ-Al2O3 was formed in the second step at 1000–1100°C. The third step was the formation of a mullite-like phase from 1200 to 1400°C and cristobalite at 1400°C. The rough tubular morphology and the mesoporosity of halloysite remained largely intact as long as the heating temperature was <900°C. Calcination at 1000°C led to distortion of the tubular nanoparticles. Calcination at higher temperatures caused further distortion and then destruction of the tubular structure. The formation of hydroxyl groups on the outer surfaces of the tubes during the disconnection and disordering of the original tetrahedral and octahedral sheets was revealed for the first time. These hydroxyl groups were active for grafting modification by an organosilane (γ-aminopropyltriethoxysilane), pointing to some very promising potential uses of halloysite for ceramic materials or as fillers for novel clay-polymer nanocomposites.