The crystallization process and crystal morphology of poly(ethylene terephathalate) (PET)-clay nanoscale composites prepared by intercalation, followed by in-situ polymerization, have been investigated by scanning electronic microscopy (SEM), transmission electronic microscopy (TEM), dynamic scanning calorimetry (DSC), and X-ray techniques, together with mechanical methods. Results of the nonisothermal crystallization dynamics show that the nanocomposites of PET (Nano-PET) have 3 times greater crystallization rate than that of pure PET. The thermal properties of Nano-PET showed heat distortion temperature (HDT) 20-50 degrees C higher than the pure PET, while with a clay content of 5%, the modulus of Nano-PET is as much as 3 times that of pure PET. Statistical results of particle distribution show that the average nanoscale size ranges from 10 to 100 nm. The particles are homogenously distributed with their size percentages in normal distribution. The agglomerated particles are 4% or so with some particles size in the micrometer scale. The morphology of exfoliated clay particles are in a diordered state, in which the morphology of the PET spherulitics are not easy to detect in most of microdomains compared with the pure PET. The molecular chains intercalated in the interlamellae of clay are confined to some extent, which will explain the narrow distribution of the Nano-PET molecular weight. The stripe-belt morphology of the intercalated clay show that polymer PET molecular chains are intercalated into the enlarged interlamellar space.