Although the outer surface of single-walled carbon nanotubes (atomically thin cylinders of carbon) can be involved in a wide range of chemical reactions, it is generally thought that the interior surface of nanotubes is unreactive. In this study, we show that in the presence of catalytically active atoms of rhenium inserted into nanotubes, the nanotube sidewall can be engaged in chemical reactions from the inside. Aberration-corrected high-resolution transmission electron microscopy operated at 80 keV allows visualization of the formation of nanometre-sized hollow protrusions on the nanotube sidewall at the atomic level in real time at ambient temperature. Our direct observations and theoretical modelling demonstrate that the nanoprotrusions are formed in three stages: (i) metal-assisted deformation and rupture of the nanotube sidewall, (ii) the fast formation of a metastable asymmetric nanoprotrusion with an open edge and (iii) a slow symmetrization process that leads to a stable closed nanoprotrusion.