A study was made on the effect of small amounts of organically modified clay on the morphology and mechanical properties of blends of low-density polyethylene and polyamide 11 at different compositions. The influence of the filler on the blend morphology was investigated using wide angle X-ray diffractometry, scanning and transmission electron microscopy and selective extraction experiments. The filler was found to locate predominantly in the more hydrophilic polyamide phase. Although such uneven distribution does not have a significant effect on the onset of phase co-continuity of the polymer components, it brings about a drastic refinement of the microstructure for the blends both with droplets/matrix and co-continuous morphologies. In addition to the expected reinforcing action of the filler, the resulting fine microstructure plays an important role in enhancing the mechanical properties of the blends. This is essentially because of a good quality of stress transfer across the interface between the constituents, which also seems to benefit for a good inter-facial adhesion promoted by the filler. Our results provide the experimental evidence for the capabilities of nanoparticles added to multiphase polymer systems to act selectively as a reinforcing agent for specific domains of the material and as a medium able to assist the refinement of the polymer phases during mixing. (C) 2010 Wiley Periodicals, Inc. J Polym Sci Part B: Polym Phys 48: 600-609, 2010