Polyester (PET) nanocomposite fibers were spun by adding master batches of linear low-density polyethylene (LLDPE) loaded with Montmorillonite (MMT) nanoclay after compatibilizing the PET and LLDPE. The spun fibers showed increased thermal stability as well as flame retardancy, which increased progressively with the amount of nanoclay loaded into the fiber. There is slight decrease in tensile strength of the fiber accompanied by decrease in elongation % indicating addition of nanoclay makes the filaments stiffer. The onset of crystallization temperature occurred at higher temperature in case of composite fibers than on the neat PET fiber because of nucleating effect of nanoclay. The dyeability of the fibers was not affected and also had very little impact on the flame retardancy of the fiber. POLYM. ENG. SCI., 2012. (C) 2012 Society of Plastics Engineers