Sulfonated poly(ethylene terephthalate) (SPET)/montmorillonite nanocomposites were prepared by in situ intercalative polymerization. The microstructure, morphology, and properties of the nanocomposites were studied with wide-angle X-ray diffraction, transmission electron microscopy, atomic force microscopy, differential scanning calorimetry, and thermogravimetric analysis. The results indicated that an increase in the -SO3Na content improved the dispersion of organically modified montmorillonite in the SPET ionomer matrix, and the dispersed layered silicates in the SPET matrix acted as nucleating agents in SPET crystallization processes and improved the thermal stability of SPET. (c) 2005 Wiley Periodicals, Inc.