Nickel (II) and silver (I) have been exchanged to varying extents in the interlayers of montmorillonite by taking nickel acetate hydrate and silver nitrate as starting materials. In situ reduction with boiling ethylene glycol gives rise to nanoparticles of nickel and silver. The nature of the metal particles has been examined by X-ray diffraction and transmission electron microscopy; magnetization measurements were also employed in the case of Ni particles. While nanoparticles in the diameter range of 8-45 nm are produced by the reduction of the deintercalated nickel acetate or silver nitrate, small metal clusters of 4-5 Angstrom remain inside the clay giving rise to a d (001) reflection of 14-15 Angstrom in the reduced metal-montmorillonite samples.