To understand diffusion processes occurring inside Fe catalysts during multiwall carbon nanotube (MWCNT) growth, catalysts were studied using atomic-resolution scanning transmission electron microscopy combined with electron energy-loss spectroscopy. Nanotube walls emanate from structurally modified and chemically complex catalysts that consist of cementite and a 5 nm amorphous FeOx cap separated by a 2-3 nm thick carbon-rich region that also contains Fe and O (a-C:FexOy). Nonuniform distribution of carbon atoms throughout the catalyst base reveals that carbon molecules from the gas phase decompose near the catalyst multisection junction, where the MWCNT walls terminate. Formation of the a-C:FexOy region provides the essential carbon source for MWCNT growth. Two different carbon diffusion mechanisms are responsible for the growth of the inner and outer walls of each MWCNT.