Intercalation and exfoliation behavior of organoclays in epoxy resin has been studied through XRD and DSC. It was found that the organoclays were easily intercalated by epoxy oligomer to form a stable epoxy/clay intercalated hybrid. Under appropriate conditions the clays were able to be further exfoliated as the epoxy resin was cured; thus, a nanocomposite was obtained. It was also found that the exfoliating ability of the organoclays was basically determined by the nature of the clays and the curing agent used. The exfoliation mechanism is discussed in this paper. (C) 2000 John Wiley & Sons, Inc.