The toxicological potential of halloysite nanotubes (HNTs) and variants after functional alterations to surface area are not clear. We assessed the toxicological response to HNTs (NaturalNano (NN)) before and after surface etching (NN-etched). Potential cytotoxicity of the two HNTs was screened in vitro in MutaTMMouse lung epithelial cells. Lung inflammation, acute phase response and genotoxicity were assessed 1, 3, and 28 days after a single intratracheal instillation of adult female C57BL/6 J BomTac mice. The doses were 6, 18 or 54 μg of HNTs, compared to vehicle controls and the Carbon black NP (Printex 90) of 162 μg/mouse. The cellular composition of bronchoalveolar lavage (BAL) fluid was determined as a measure of lung inflammation. The pulmonary and hepatic acute phase responses were assessed by Serumamyloida mRNA levels in lung and liver tissue by real-time quantitative PCR. Pulmonary and systemic genotoxicity were analyzed by the alkaline comet assay as DNA strand breaks in BAL cells, lung and liver tissue. The etched HNT (NN-etched) had 4–5 times larger BET surface area than the unmodified HNT (NN). Instillation of NN-etched at the highest dose induced influx of neutrophils into the lungs at all time points and increased Saa3 mRNA levels in lung tissue on day 1 and 3 after exposure. No genotoxicity was observed at any time point. In conclusion, functionalization by etching increased BET surface area of the studied NN and enhanced pulmonary inflammatory toxicity in mice.