Inherently conducting polymers (ICP) have attracted the attention of researchers because of their low cost and environmental stability. However, for commercial applications the poor processibility and solubility of ICPs have inhibited their widespread use. To avoid these disadvantages adducts, blends, and composites of conducting polymers have been developed. With a view to enhance the processibility of polyaniline (PANI), this work reports the synthesis of nano PANI polydihydroxydimethylsiloxane (PDMS) adduct and the formulation of its nanocomposite via the dispersion of this nano adduct in butylated melamine formaldehyde (BMF) cured soy alkyd (SA) in different weight loadings (0.25 wt %, 0.5 wt %, 1 wt %). The formation of PANI-PDMS adduct and its dispersion in butylated melamine formaldehyde (BMF) cured soy alkyd (SA) was confirmed by FTIR, UV-visible, H-1-NMR whereas the morphological characterization was done using TEM and X-ray diffraction analyses. The presence of PANI-PDMS in SA-BMF resin was found to significantly enhance the physicochemical, physicomechanical, and thermal properties which could be utilized in the development of corrosion protective paints and coatings. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci, 2012