The condensation of water inside multiwalled carbon nanotubes has been monitored and controlled using environmental scanning electron microscopy. Undersaturated vapor condenses inside nanotubes and forms nanometer-thick water films. Simultaneously, nanotubes deform and decrease their apparent diameter. When the vapor pressure in the chamber approaches the saturation pressure, we observe the formation of menisci and spontaneous buckling of the nanotubes. We derive a criterion of the buckling instability caused by capillary condensation. Remarkably, the buckling criterion appears to be independent of the meniscus shape. Using our experiments and models, we estimated the circumferential Young's modulus of large-diameter carbon nanotubes with disordered wall structure produced by the chemical vapor deposition method (CVD) to be E(thetatheta) approximately 13-18 MPa. It appears to be at least 2 orders of magnitude lower than the longitudinal modulus of nanotubes produced by arc discharge or catalytic CVD methods. The reported experiments and proposed theory suggest possible applications of "soft" nanotubes as sensors to probe minute concentrations of absorbable gases and vapors.