The present work reports the effect of bentonite clay on methane hydrate formation and dissociation in synthetic seawater of salinity 3.55% of total dissolved salts. Extensive observations of pressure-temperature equilibrium during formation and decomposition of methane hydrate under different conditions have been made. It is observed that phase equilibrium conditions of hydrate are affected on changing the concentration of bentonite clay in synthetic seawater. Induction time for hydrate nucleation has been measured under different concentrations of clay and subcooling conditions. The presence of bentonite clay in synthetic seawater reduces the induction time of hydrate formation. Enthalpy of hydrate dissociation is calculated by Clausius-Clapeyron equation using measured phase equilibrium data. The amount of gas consumed during hydrate formation has been calculated using real gas equation. It is found that a larger amount of gas is consumed upon addition of bentonite clay in synthetic seawater.