The main objective of this study was to synthesize and characterize the properties of ethylene-propylene-diene terpolymer (EPDM)/clay nanocomposites. Pristine clay, sodium montmorillonite (Na+-MMT), was intercalated with hexadecyl ammonium ion to form modified organoclay (16Me-MMT) and the effect of intercalation toward the change in interlayer spacing of the silicate layers was studied by X-ray diffraction, which showed that the increase in interlayer spacing in Na+-MMT by 0.61 nm is attributed to the intercalation of hexadecyl ammonium ion within the clay layers. In the case of EPDM/16Me-MMT nanocomposites, the basal reflection peak was shifted toward a higher angle. However, gallery height remained more or less the same for different EPDM nanocomposites with organoclay content up to 8 wt %. The nanostructure of EPDM/clay composites was characterized by transmission electron microscopy, which established the coexistence of intercalated and exfoliated clay layers with an average layer thickness in the nanometer range within the EPDM matrix. The significant improvement in thermal stability and mechanical properties reflects the high-performance nanocomposite formation. (C) 2004 Wiley Periodicals, Inc.