Poly(butylene terephthalate) nanocomposites with organically modified montmorillonites have been prepared by in-situ ring opening polymerization of PBT cyclic oligomers. High molecular weight polymers can be obtained by choosing the proper polymerization conditions and catalyst in very short polymerization time (10 min) and low temperature (205 degrees C). A better dispersion of the clay and a consistently higher M-w have been obtained by this method respect to the standard melt intercalation approach, leading to improved thermo-mechanical properties of the nanocomposite. (C) 2009 Wiley Periodicals, Inc. J AppI Polyrn Sci 114: 3211-3217, 2009