Montmorillonite (MMT)-based nanocomposites of polypyrrole (PPY) were prepared through the polymerization of pyrrole with MMT and FeCl3-impregnated MMT in bulk and in aqueous medium. The composites were characterized by IR, X-ray diffraction (XRD), and scanning electron microscopy (SEM) studies. XRD analyses revealed no change in d(001) spacing in MMT (9.8 Angstrom), suggesting no intercalation of PPY into MMT lamellae. TEM analysis indicated the particle size to be 25 +/- 7 nm. The bulk conductivity of the composites was in the range of (1.3 to 26) x 10(-5) S/cm, depending on the FeCl3-impregnation level and on the PPY loading in the composites. Suitable procedures were developed for obtaining a stable aqueous dispersion and a reversible dispersion of these composites.