Nanocomposites based on 80/20 and 20/80 (w/w) poly(E-caprolactone) (PCL)/poly(ethylene oxide) (PEO) immiscible blends and organophilic layered silicates were prepared with melt extrusion. From transmission electron microscopy analysis, it was observed that the exfoliated silicate platelets were preferentially located at the interface between the two blend phases. When the blend-based nanocomposites were prepared via a two-step process in which the silicates were first premixed with the PEO component or with the PCL component, the silicate layers migrated from the PEO phase or PCL phase to the interface. The rheological behavior of the nanocomposites was also investigated. At low frequencies, the frequency dependence of the storage modulus changed from a liquidlike behavior for the unfilled blend to a solidlike behavior for the nanocomposites, indicating the formation of a network structure as a result of exfoliation. From the scanning electron micrographs, a monotonic decrease of the PEO domain size in the 80/20 PCL/PEO blend was observed as a function of the organophilic clay content. Therefore, a clear emulsifying effect was induced by the organophilic layered silicates in the immiscible PCL/PEO blend. (c) 2007 Wiley Periodicals, Inc.