Epoxy/clay nanocomposites modified with carboxyl-terminated poly (butadiene-co-acrylonitrile) (CTBN) liquid rubber (epoxy/clay/CTBN nanocomposites) are synthesized using two different pre-mixing techniques: mechanical high shear mixer (homogenizer) and ultrasonication using tip sonicator. The observations suggest that low molecular weight CTBN easily diffuses into clay galleries, thereby increasing the d-spacing in epoxy/clay/CTBN nanocomposites, regardless of pre-mixing method. High shear mixing causes breaking of clay platelets in epoxy/clay/ CTBN nanocomposites, leading to a reduction in the aspect ratio. Epoxy/clay/CTBN nanocomposites prepared via sonication have achieved a uniform and stable morphology, in which the clay platelets are dispersed in epoxy matrix in such a way that most of them try to localize near the phase-separated CTBN domains. Thermal and mechanical properties of the resulting nanocomposites are correlated with morphological findings.