Nanocomposites were formulated by curing a sonicated mixture of epoxy resin, C18 clay, and acrylic rubber dispersants. At 5.5 phr (parts per hundred) organoclay loading and a rubber concentration of 15 phr, the tensile-failure strain of the nanocomposite was found to be higher than that of epoxy nanocomposite, rubber-dispersed epoxy, and pristine epoxy. A plausible mechanism for improvement of the failure strain of nanocomposites is proposed.