We have synthesized size selective silver nanoparticles (Ag-NPs) in the nanopores of modified montmorillonite clay by an "in situ'' approach. The modification of montmorillonite K-10 was carried out with HCl under controlled condition for generating a high surface area and porous matrix which acted as hosts for the "in situ'' generation of silver nanoparticles. The synthesized nanocomposite material was well characterized by UV-Visible spectroscopy, powder XRD, N2 adsorption-desorption isotherm and TEM analysis. UV-Visible and TEM study revealed silver nanoparticles of 0-10 nm were evenly distributed on the support. The Ag-NPs stabilized on modified montmorillonite serves as an efficient green heterogeneous catalyst for the three component one-pot synthesis of propargylamines with 83-95 % yield and 100 % selectivity under mild reaction condition. The nanocatalyst can be recycled several times without any significant loss in its catalytic activity.