Exfoliation of a stack of sheets (a model for clay platelets) in a dynamic matrix of polymer chains is investigated by a computer simulation model. How the interplay between the thermodynamics (interaction-driven) and conformational (structural constraints) entropy affects the exfoliation of sheets is the subject of this study. A stack of four sheets with a small initial interlayer distance constitutes the layer on a discrete lattice. The layered platelets are immersed in a matrix represented by the mobile polymer chains which occupy a fraction (concentration) of the lattice sites. Both sheets and chains are modeled by the bond-fluctuation mechanism and execute their stochastic motion via Metropolis algorithm. An attractive and a repulsive interaction between the polymer matrix and platelets are considered. Exfoliation of the sheets is examined by varying the molecular weight of the polymer chains forming a dynamic network matrix with various degrees of entanglements. At low-molecular weight of the polymer, exfoliation is achieved with repulsive interaction and the exfoliation is suppressed with attractive matrix as sheets stick together via polymer mediated interaction introduced by intercalated polymer chains. Increasing the molecular weight of the polymer matrix suppresses the exfoliation of sheets primarily due to enhanced entanglement-at high-molecular weight (with the radius of gyration of polymer chains larger than the characteristic linear dimension of the platelets), the stacked (layered) morphology is arrested via entropic trapping and exfoliation ceases to occur. (C) 2008 Wiley Periodicals, Inc. J Polym Sci Part B: Polym Phys 46: 2696-2710, 2008