The thermosetting resin from 2,2'-(1,3-phenylene)-bis(4,5-dihydro-oxazoles) (PBO) and bis(3-phenyl-3,4-dihydro-2H-1,3-benzoxazine)isopropane (BZ) was prepared, and it was found that the thermal property of the final resin was affected greatly by the content of PBO. The nanocomposite from the thermosetting resin from BZ and PBO (molar ratio of PBO to BZ, 0.8: 1) (PBZ-PBO) and organically modified montmorillonite (OMMT) was prepared by melt method. Differential scanning calorimetry showed that on the introduction of OMMT, the onset Curing temperature of the copolymerization of BZ and PBO decreased. The X-ray diffractometer and transmission electron micrograph characterization of the dispersion of OMMT in the PBZ-PBO matrix suggested that exfoliation structure of OMMT was achieved. Dynamic mechanical analyses indicated that the nanocomposites exhibited much higher T. values than the PBZ-PBO resin and pristine polybenzoxazine, and storage modulus of the nanocomposites was maintained Lip to higher temperature with the increasing OMMT content. Dynamic thermogravimetric analysis showed that the dispersion of clay nanolayers in the PBZ-PBO copolymer gave better thermal stability. (c) 2006 Wiley Periodicals, Inc.