Epoxy resin was used as a compatilizer to prepare poly(butylene terephthalate)/clay nanocomposites via melt intercalation. Three different mixing sequences were attempted in the present work: (1) to mix poly(butylene terephthalate) (PBT), epoxy, and organoclay in one step; (2) first to mix epoxy and organoclay, and then mix it with PBT; (3) to prepare PBT/organoclay hybrid first, and then mix it with epoxy to get the final nanocomposites. The results from X-ray diffraction (XRD) reveal that all these hybrids present an intercalated structure. However, it can be observed that there are distinct differences in the amount and average size of clay tactoids dispersed in those hybrids from the transmission electron microscope (TEM) photographs, which are further confirmed successfully by the rheological measurements. On the basis of the strain overshoot intensity and the low-frequency solid-like response level in the small amplitude oscillatory shear (SAOS) measurements, it can be concluded that the blending sequence (2) is the best way to obtain a nice dispersion of clay in the matrix, forming a percolated tactoids network with highest density and intensity. (c) 2005 Wiley Periodicals, Inc.