The effect of sodium sulfonate functionalization of poly(butylene terephthalate) (PBT) on the properties of PBT/montmorillonite composites was studied. The results of the study clearly showed that organic modification of montmorillonite clay coupled with the modification of PBT with low levels (1.0-5.0 mol %) of -SO3Na groups results in the production of highly exfoliated nanocomposites by a simple extrusion process. With regard to the effect of -SO3Na content, as little as 1.0 mol % -SO3Na groups was needed to achieve considerable exfoliation of R4N+ montmorillonite. Although the degree of exfoliation was not observed to be strongly dependent on -SO3Na content, mechanical properties such as Young's modulus and high-temperature storage moduli at temperatures above T-g increased with increasing -SO3Na content. These enhancements in mechanical properties produced by a higher -SO3Na content were due to an increase in the number of interactions between the clay particles and the matrix via electrostatic interactions involving the -SO3Na groups.