Two classes of nanocomposites were synthesized using an unsaturated polyester resin as the matrix and sodium montmorillonite as well as an organically modified montmorillonite as the reinforcing agents. X-ray diffraction pattern of the composites showed that the interlayer spacing of the modified montmorillonite expanded from 1.25 nm. to 4.5 nm, indicating intercalation. Glass transition values of these composites increased from 72degreesC, in the unfilled unsaturated polyester, to 86degreesC in the composite with 10% organically modified montmorillonite. From Scanning Electron Microscopy, it is seen that the degree of intercalation/exfoliation of the modified montmorillonite is higher than in the unmodified one. The mechanical properties also supported these findings, since in general, the tensile modulus, tensile strength, flexural modulus, flexural strength and impact strength of the composites with modified montmorillonite were higher than the corresponding properties of the composites with unmodified montmorillonite. The tensile modulus, tensile strength, flexural modulus and flexural strength values showed a maximum, whereas the impact strength exhibited a minimum at approximately 3-5 wt% modified montmorillonite content. These results imply that the level of exfoliation may also exhibit a maximum with respect to the modified montmorillonite content. The level of improvement in the mechanical properties was substantial. Adding only 3 wt% organically modified clay improved the flexural modulus of unsaturated polyester by 35%. The tensile modulus of unsaturated polyester was also improved by 17% at 5 wt% of organically modified clay loading.