Nanocomposites comprising nanoscale platelets derived from layered silicates treated with an organic modifier in thermoplastic vulcanizates (TPV) and PP/EPDM blends were prepared by direct melt intercalation. The interlayer spacing and dispersion of the nanoclay are greatly affected by polar forces between the nanoclay and the polymeric matrix material. The mechanical properties strongly depend on the structure and morphology of the nanocomposites, which can be modified by phase partitioning of the reinforcements. Morphology characterization by X-ray diffraction (XRD) and transmission electron microscopy (TEM) provides the basis for understanding the observed structure-property relationships in this class of materials. With the increase of organoclay loading, the tensile modulus of TPV/clay nanocomposites increases by up to 170% at 8 wt% organoclay loading, while tensile strength gradually decreases with increase of organoclay loading. In the physical blend systems, the tensile modulus increases for all PP/EPDM blend compositions and generally shows higher values in the case of selectively reinforced phases in blends having a continuous PP matrix. The tensile strength of those blends decreases at higher nanoclay ccntent no matter how blending is performed. However, the tensile strength may increase when sufficient selectively reinforced EPDM phase is present. (C)2004 Society of Plastics Engineers.