The effect of nanoclay on the morphology and properties of poly(methyl methacrylate) (PMMA)/high-density polyethylene (HDPE) blends was studied. A scanning electron microscopy study of the PMMA/HDPE (70/30 w/w) blends with nanoclay indicated a reduction in the average domain sizes of the dispersed HDPE phase and, hence, a better extent of mixing compared to that of the blends without any nanoclay. An X-ray diffraction study and transmission electron microscopy revealed the localization of intercalated nanoclay in the PMMA matrix of the PMMA/HDPE (70/30 w/w) blend. However, the same effect of clay was not observed in the PMMA/HDPE (30/70 w/w) blend when HDPE became the matrix. In the PMMA/HDPE (30/70 w/w) blend, the addition of nano-clay increased the domain size of the dispersed PMMA domains by preferential location of the clays inside the PMMA domains. The addition of polyethylene-grafted maleic anhydride in both compositions of the PMMA/HDPE blend effectively reduced the domain size of the disperse phases in the blend. However, the presence of clay increased the tensile strength and storage modulus of the PMMA/HDPE blends in both blend compositions. Thus, in the PMMA/HDPE blend, the clay platelets acted as a effective compatibilizer as long as they were dispersed mainly in the matrix phase. (C) 2009 Wiley, Periodicals, Inc. J Appl Polym Sci 116: 1010-1020, 2010