Polymer nanocomposites containing several percent of exfoliated layered silicates are materials with a unique weight/performance ratio. The only parameter that is not enhanced, but even decreased, is toughness. This work focused on the toughness enhancement of these advanced systems with polyamide matrix prepared via melt-mixing (i.e., by a conventional method of polymer processing having an advantage of easy simultaneous addition of other components). Analogously to ternary polyamide blends with improved mechanical behavior, containing finely and separately dispersed elastomer and rigid polymer, elastomer particles with an average size of 60 nm were incorporated in the nanocomposite. The very low particle size was achieved by in situ reactive compatibilization by using suitably functionalized elastomers. The simultaneously increasing viscosity of the system enhanced exfoliation of the silicate. Melt exfoliated nanocomposites containing 3 wt % of clay and 5 wt % of elastomer particles exhibit increased toughness without significant loss of other properties. Elastomer particles increase toughness by both acting as stress concentrators (by initiating energy absorbing microdeformations) and influencing the clay-induced matrix crystalline structure. (C) 2005 Wiley Periodicals, Inc.