The paper describes the preparation of poly(dimethyl siloxane) (PDMS)/clay nanocomposite membranes by in situ crosslinking of vinyl terminated PDMS (V-PDMS) resin in the presence of clay content varying from 1% w/w to 10% w/w in order to evaluate the influence of layered silicate on pervaporation characteristics of PDMS. Two commercial clays, Cloisite 30B and Nanomer 1.30P functionalized with polar and nonpolar surfactants were chosen for this purpose and PDMS membranes were prepared in the absence/or presence of varying amounts of different clays. Structural, mechanical and thermal characterization was done using Fourier transform infrared spectroscopy (FTIR), tensile testing system and thermogravimetric analyzer. Morphological characterization using X-ray diffraction and transmission electron microscopy showed intercalation or partial exfoliation of silicate layers. Surface characterization using scanning electron microscope showed an uniform dispersion of nanoclays in PDMS matrix. Two nanocomposite membranes having PDMS/nanoclay (10% w/w) were selected based on their mechanical properties and evaluated for their performance in separating azeotropic toluene/methanol mixture. Composite membranes showed higher selectivity as compared to neat PDMS and toluene was a preferred permeant. The total flux for composite membranes was lower as compared to PDMS membrane. This study demonstrates that polymer nanocomposite membranes could be an alternative way for tuning between permeation flux and selectivity in addition to enhanced thermal and mechanical properties. (C) 2011 Elsevier B.V. All rights reserved.