Thermal degradation of polyethylene terephthalate (PET) is accelerated in the presence of commercial organoclays, and this remains a challenge for the industry. While a high level of clay delamination is required in polymer nanocomposites, thermal degradation increases furthermore for highly exfoliated morphologies due to an increased exposure of the polymer matrix to silicate nanoplatelets. In this work, two different types of organomodified clay were melt blended with PET in the presence of a multifunctional epoxy-based chain extender, Joncryl (R) ADR-4368F (Joncryl), to compensate for molecular weight reduction during processing. The chain extender was added via a master-batch approach in order to promote clay delamination before molecular weight increase. The morphological, rheological, mechanical, thermal, and gas barrier characteristics of the nanocomposites were studied using several characterization techniques. A remarkable improvement in viscoelastic properties was observed for samples containing the chain extender due to recoupling of degraded chains. A better clay dispersion, enhanced barrier properties and increased Young modulus were also obtained for nanocomposites containing the chain extender. Compared to neat PET films, the oxygen permeability of nanocomposite films containing 4 wt% Cloisite (R) 30B and 1 wt% Joncryl decreased by 46%, whereas the corresponding permeability decrease for the Nanomer (R) I.28E nanocomposite was 40%. A 66% improvement in Young modulus was obtained for nanocomposite films containing 4 wt% Nanomer (R) I.28E and 1 wt% Joncryl. The improvement of the tensile modulus for the corresponding Cloisite (R) 30B nanocomposite was slightly less. (C) 2012 Elsevier Ltd. All rights reserved.