We propose a theoretical framework and dynamical model for the description of the natural optical activity and Faraday rotation in an individual chiral single-wall carbon nanotube (CNT) in the highly nonlinear coherent regime. The model is based on a discrete-level representation of the optically active states near the band edge. Chirality is modelled by a system Hamiltonian in a four-level basis corresponding to energy-level configurations, specific for each handedness, that are mirror reflections of each other. The axial magnetic field is introduced through the Aharonov–Bohm and Zeeman energy-level shifts. The time evolution of the quantum system, describing a single nanotube with defined chirality, under an ultrashort polarized pulse excitation is studied using the coupled coherent vector Maxwell-pseudospin equations (Slavcheva 2008 Phys. Rev. B 77 115347). We provide an estimate for the effective dielectric constant and the optical dipole matrix element for transitions excited by circularly polarized light in a single nanotube and calculate the magnitude of the circular dichroism and the specific rotatory power in the absence and in the presence of an axial magnetic field. Giant natural gyrotropy (polarization rotatory power ~3000° mm−1 (B=0 T)), superior to that of the crystal birefringent materials, liquid crystals and comparable or exceeding that of the artificially made helical photonic structures, is numerically demonstrated for the specific case of a (5, 4) nanotube. A quantitative estimate of the coherent nonlinear magneto-chiral optical effect in an axial magnetic field is given (~30 000° mm−1 at B=8 T). The model provides a framework for the investigation of the chirality and magnetic field dependence of the ultrafast nonlinear optical response of a single CNT.