Nanocomposites of blends of PMMA and poly(styrene-co-acrylonitrile) (SAN) with natural (PM) or organically modified montmorillonite clays (Cloisite 30B, 25A, and 15A) were prepared by solution mixing and the effect of clay on the phase separation behavior along with morphologies of nanocomposites was investigated. Nanocomposites containing clay C30B prepared from methyl ethyl ketone showed the noticeable decrease in the cloud points. None of the other nanocomposites showed the increase in the cloud point. Location of clay particles in the phase separated matrix is observed to be different depending on the type of clays and solvents. The lowest cloud point of nanocomposites containing C30B may arise from the good dispersion of C30B where Clay C30B may act as the nucleating agent inducing phase separation. Dynamic mechanical and thermal analyses support above observations. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 117: 49-57, 2010