Polyethylene-octene elastomer/organoclay nanocomposites were prepared by a melt blending process. It was found that the addition of a small amount of glycidyl methacrylate and a peroxide during the melt mixing induced facile intercalation of the polymer chains into the organoclay and dispersion of the clay particles on the nanometer scale, which was confirmed by X-ray diffraction and transmission electron microscopy. Enhanced mechanical properties of the nanocomposites were observed from tensile, dynamic mechanical, and tear testing. Oscillatory shear-controlled rheology in the molten state of the nanocomposites revealed a pseudo solid-like behavior as well as an enhanced shear thinning behavior.