Clay reinforced polyethylene nanocomposites were prepared by melt mixing followed by transfer molding. The microstructure of the composites was characterized using Fourier transform infrared spectrometer and X-ray diffraction. Results revealed the relative degree of particle orientation as a function of depth in the transferred molded materials. The particles were mostly oriented at the surface layers and randomly distributed at the core region. The anisotropy in mechanical properties due to clay orientations was characterized through novel dynamic microindentation test and analyzed by finite element simulation. When loaded in the flow direction (direction of clay orientations), the composites exhibited higher modulus at the surface than at the core; while loaded normal to the flow direction, the composites exhibited lower modulus at the surface than at the core.(C) 2012 Wiley Periodicals, Inc. J. Appl. Polym. Sci., 2013