Scanning transmission X-ray microscopy was demonstrated to deliver detailed local structure and chemical composition of a complicated system with titania nanoparticles dispersed inside and outside the double-walled carbon nanotube (DWNT) channels. Areas with inhomogeneous distribution of titania and the associated water were particularly investigated at the C K-edge, Ti L-edge, and O K-edge. The results show that titania nanoparticles located inside DWNTs are present as amorphous, while those unsuccessfully introduced into the channels behave more like bulk materials in forms of anatase and rutile. Strong interaction was detected between the confined titania and DWNTs, as evidenced by up to 0.6 eV energy shift at the Ti L-edge. Strong hydration was observed for the as-prepared samples. Functionalization due to reduction and oxidation between titania and carbon layer is observed upon heat-treatment. This detailed structural information of specific areas cannot be provided by other techniques such as HRTEM, XRD, and XANES.