Polyethylene (PE)-layered vermiculite (VMT) nanocomposites were fabricated via direct melt compounding in a twin-screw extruder followed by injection molding. Exfoliated PE/VMT nanocomposites were readily prepared via in situ melt mixing of maleic anhydride modified VMT with PE. Maleic anhydride acts as either the intercalation agent for VMT or as a compatibilizer for the PE and VMT phases. X-ray diffraction and transmission electron microscopic observations revealed the formation of exfoliated PE/VMT nanocomposites. The experimental results showed that the storage modulus and strength of nanocomposites tend to increase with an increasing VMT content. Nearly 25.35% increment in the tensile strength and 50% increment in the storage modulus were achieved by incorporating 4 wt % VMT into PE. The thermal properties of the nanocomposites were investigated by dynamic mechanical analysis and differential scanning calorimetry. The glass-transition temperature of PE/VMT nanocomposites appeared to increase upon the introduction of VMT into the PE matrix. The effects of maleic anhydride addition on the formation of the PE/VMT nanocomposites are discussed. (C) 2003 Wiley Periodicals, Inc.