Quantum mechanics is formulated as a geometric theory on a Hilbert manifold. Images of charts on the manifold are allowed to belong to arbitrary Hilbert spaces of functions including spaces of generalized functions. Tensor equations in this setting, also called functional tensor equations, describe families of functional equations on various Hilbert spaces of functions. The principle of functional relativity is introduced which states that quantum theory (QT) is indeed a functional tensor theory, i.e., it can be described by functional tensor (...) equations. The main equations of QT are shown to be compatible with the principle of functional relativity. By accepting the principle as a hypothesis, we then explain the origin of physical dimensions, provide a geometric interpretation of Planck’s constant, and find a simple model of the two-slit experiment and the process of measurement. (shrink)