For improved stability of fluid-conveying pipes operating under the thermal environment, functionally graded materials (FGMs) are recommended in a few recent studies. Besides this advantage, the nonlinear dynamics of fluid-conveying FG pipes is an important concern for their engineering applications. The present study is carried out in this direction, where the nonlinear dynamics of a vertical FG pipe conveying hot fluid is studied thoroughly. The FG pipe is considered with pinned ends while the internal hot fluid flows with the steady or pulsatile flow velocity. Based on the Euler–Bernoulli beam theory and the plug-flow model, the nonlinear governing equation of motion of the fluid-conveying FG pipe is derived in the form of the nonlinear integro-partial-differential equation that is subsequently reduced as the nonlinear temporal differential equation using Galerkin method. The solutions in the time or frequency domain are obtained by implementing the adaptive Runge–Kutta method or harmonic balance method. First, the divergence characteristics of the FG pipe are investigated and it is found that buckling of the FG pipe arises mainly because of temperature of the internal fluid. Next, the dynamic characteristics of the FG pipe corresponding to its pre- and post-buckled equilibrium states are studied. In the pre-buckled equilibrium state, higher-order parametric resonances are observed in addition to the principal primary and secondary parametric resonances, and thus the usual shape of the parametric instability region deviates. However, in the post-buckled equilibrium state of the FG pipe, its chaotic oscillations may arise through the intermittent transition route, cyclic-fold bifurcation, period-doubling bifurcation and subcritical bifurcation. The overall study reveals complex dynamics of the FG pipe with respect to some system parameters like temperature of fluid, material properties of FGM and fluid flow velocity. © 2019, Springer Nature B.V.