The differences that direct melt compounding and masterbatch dilution cause in the properties of melt compounded polypropylene (PP) and high density polyethylene-based (PE-HD) nanocomposites are presented. The results include comparison of properties and morphology of directly melt processed organoclay nanocomposites with similar compounds diluted from commercial and in-house-made masterbatches to clay concentrations of 1, 3, 6, and 8 wt%. The compounds were prepared with a co-rotating Brabender twin-screw ex truder. The degree of exfoliation and the dispersion of the nanoclay were verified with transmission electron microscopy and X-ray diffraction. Thermal stability of the materials was examined with thermogravimetric analysis and the mechanical properties of the compounded materials were also determined. The most promising results regarding mechanical behavior were achieved with the in-house-made masterbatch in the form of a notable increase in Young's modulus in both matrices. There was also a distinct increase in impact strength when masterbatch was used. Changes were more pronounced in case of PP. POLYM. ENG. SCI., 49:1438-1446, 2009. (C) 2009 Society of Plastics Engineers