AbstractSurface modification of montomorillonite for improvement in d‐spacing was done by column chromatography with quaternary long chain ammonium salt having cation exchange capacity of 110 meq/100 g. Organically modified montomorillonite (OMMT)/poly(vinyl chloride) (PVC) nanocomposites were prepared through direct melt compounding on a conventional twin screw extruder. Because of improved d‐spacing of OMMT, the polymer chains get exfoliated in between the plates of clay and dispersed uniformly. The mechanical properties of the nanocomposites were found to be appreciable at 12 wt % loading of OMMT. Moreover, rheological data, such as torque, fusion time, viscosity, and shear rate were also recorded on Brabender Plasticorder. The improvement in mechanical properties with increase in amount of OMMT loading is evidenced from reduction in shear viscosity and torque. Also nanoclay is acting as a lubricating agent with packing effect, which reduces the torque with decrease in viscosity along with increment in elongation at break. Because of soft nature of OMMT and improvement in d‐spacing the processing of PVC becomes easier, and hence, OMMT is playing a dual role as a (i) good processing aid and (ii) filler. © 2010 Wiley Periodicals, Inc. J Appl Polym Sci, 2011