In this study, polymer-clay nanocomposites of various concentrations were prepared by ultrasonically assisted polymerization and melt-mixing processes. A sonication process using power ultrasonic waves was employed to enhance nano-scale dispersion during melt-mixing of polymer blends and organically modified clay. We expected enhanced breakup of layered silicate bundles and further reduction in the size of the dispersed phase, with better homogeneity compared to the different immiscible blend pairs. X-ray diffraction (XRD) and Transmission Electron Microscopy (TEM) were used to characterize the structures of the nanocomposites. The rheological behaviors of the obtained nanocomposites were measured with parallel plate rheometry. It was found that the ultrasound-assisted process successfully generated exfoliated nanocomposites and promoted in-situ compatibilization of the matrix comprising an immiscible pair of polymers in a blend. The resulting nanocomposite exhibited superior thermal stability and elastic modulus compared to the base polymer. (C) 2004 Society of Plastics Engineers.