Intercalated nanocomposites of modified montmorillonite clays in a glassy epoxy were prepared by crosslinking with commercially available aliphatic diamine curing agents. These materials are shown to have improved Young's modulus but corresponding reductions in ultimate strength and strain to failure. The results were consistent with most particulate-filled systems. The macroscopic compressive behavior was unchanged, although the failure mechanisms in compression varied from the unmodified samples. The fracture toughness of these materials was investigated and improvements in toughness values of 100% over unmodified resin were demonstrated. The fracture-surface topology was examined using scanning electron and tapping-mode atomic force microscopies and shown to be related to the clay morphology of the system.