Postconsumer poly(ethylene terephthalate) waste bottles were glycolyzed as precursors of unsaturated polyester resin (UPR) and their montmorillonite (MMT)-filled nanocomposites. The glycolysis product (hydroxyl-terminated oligomers) was converted into UPR with various acid contents. These resins were miscible with styrene and could be cured with peroxide initiators to produce thermosetting unsaturated polyester (UP). Nanocomposites composed of UP matrix and organically modified clay were prepared by in situ polymerization. These were characterized for thermal and dynamic mechanical properties. Transmission electron microscopy was also used to study the morphology at different length scales and showed the nanocomposites to be compromised of a random dispersion of intercalated/exfoliated aggregates throughout the matrix. With an increase in unsaturated acid content (for a fixed content of clay), the value of storage modulus varied from 2737 to 4423 MPa. The glass-transition temperatures of these nanocomposites ranged from 54 to 78 degrees C, and the crosslink density varied from 3.70 x 10(5) to 5.72 x 10(5) mol/m(3). The X-ray diffraction (XRD) of modified MMT exhibited a peak that vanished completely in the polymer nanocomposites. Thus, the XRD results apparently indicated a distortion of the platy layers of nanofiller in the UP nanocomposites. The nanocomposites showed higher modulus values (2737-4423 MPa) compared to the pristine polymer (2693 MPa). From thermogravimetric analysis, all of the nanocomposites were stable up to 200 degrees C and showed a two-stage degradation. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci 122: 2731-2740, 2011