Organically modified montmorillonite was synthesized with a novel 1,2-dimethyl-3-N-alkyl imidazolium salt or a typical quaternary ammonium salt as a control. Poly(ethylene terephthalate) montmorillonite clay nanocomposites were compounded via melt-blending in a corotating mini twin-screw extruder operating at 285 degreesC. The nanocomposites were characterized with thermal analysis, X-ray diffraction, and transmission electron microscopy to determine the extent of intercalation and/or exfoliation present in the system. Nanocomposites produced with N,N-dimethyl-N,N-dioctadecylammonium treated montmorillonite (DMDODA-MMT), which has a decomposition temperature of 250 degreesC, were black, brittle, and tarlike resulting from DMDODA degradation under the processing conditions. Nanocomposites compounded with 1,2-dimethyl-3-N-hexadecyl imidazolium treated MMT, which has a decomposition temperature of 350 degreesC, showed high levels of dispersion and delamination.