Poly(F-caprolactone)/organomodified montmorillonite nanocomposites were prepared by in situ polymerization with dibutyltin dimethoxide as an initiator/catalyst. The montmorillonite was first modified with 1-decyl2-methyl-3-(11-hydroxyundecyl)imidazolium cation. The hydroxyl functionality was used not only for initiating polymer chains from the surface of the clay platelets but also for grafting polymer chains to the surface by acting as a reversible chain-transfer agent. The molecular weights of the polymer chains were controlled by the ratio of monomer to hydroxyl content. X-ray diffraction and transmission electron microscopy studies confirmed that highly exfoliated nanostructures were formed. The amount of inorganic component did not affect the thermal behavior of the polymer matrix as shown by differential scanning calorimetry or thermogravimetric analysis. The highly exfoliated clay sheets acted as nucleating agents and increased the degree of crystallinity from 51 to 69% at 5 wt %. Dvnamic mechanical analysis revealed an enhancement of the storage modulus with increasing clay content above the glass-transition temperature. (C) 2007 Wiley Periodicals, Inc.