Epoxy/clay nanocomposites were prepared by swelling organoclay in an epoxy resin, diglycidyl ether of bisphenol A, followed by curing with an aromatic hardener, diethyltoluenediamine. A combination of X-ray diffraction with transmission electron microscopy showed the coexistence of intercalated and exfoliated clay morphologies throughout the matrix. In addition, a microscopic and homogeneous dispersion of clay agglomerations, with sizes ranging from about 2 to 5 mum, was revealed by optical microscopy. Dynamic mechanical analysis indicated a steady increase in storage modulus and a gradual decrease in high glass-transition temperature as the clay loading increased. The fracture toughness of the nanocomposites significantly increased with increasing clay concentration, suggesting a toughening effect from the clay particles. Scanning electron microscopy and optical microscopy observations of the epoxy/clay nanocomposites suggested that shear yielding of the matrix, crack deflection, voiding, and debonding of clay particles and epoxy matrix are among the operative toughening mechanisms observed. (C) 2004 Wiley Periodicals, Inc.