By in situ polycondensation, poly(ethylene terephthalate) (PET)/montmorillonite (MMT) nanocomposites was prepared, which were characterized via X-ray diffraction and transmission electron microscope. The processing stability of these nanocomposites was investigated by the change of number-average molecular weight and carboxyl terminal group content during injection molding, and the thermal stability of the nanocomposites was investigated via thermogravimetric analysis. It was found that some metallic derivatives released from MMT during polycondensation had a great influence on the processing and thermal stabilities of the nanocomposites. The quantity of these metallic derivatives was determined by inductively coupled plasma. The stabilization effect of phosphorous compounds generated from MMT modified with phosphonium was observed. Processing stability and thermal stability of these nanocomposites exhibited similar trend because of almost the same causes. (c) 2006 Wiley Periodicals, Inc.