A new approach is described for utilizing the swelling characteristics of montmorillonite (MMT) to compensate for polymerization-induced shrinkage in unsaturated polyester. The naturally sorbed sodium cation, at the lamellar interface of the mineral, was exchanged with the onium salt of 12-aminolauric acid to produce organophilic MMT, which was compatible with the host resin. The latter, boosted by a small amount of dimethylformamide, swelled into a polymerizing polyester resin, thus reducing polymerization shrinkage. The incorporation of 5% 12-aminolauric MMT caused the shrinkage of the neat isophthalic polyester resin to be reduced from 8.7 to 2.6%. Wide-angle X-ray diffraction and high resolution scanning electron microscopy analyses showed that the shrinkage reduction was associated with increased interparticle spacing and uniform dispersion of the MMT domains on the nanoscale. Mechanical measurements indicated that the flexural strength of the new compound was comparable to that of the neat resin; however, a remarkable 100% increase in toughness was observed in association with a minor decrease in the modulus of elasticity. This; increased toughness may be attributed to macromolecular changes associated with the monofunctional acid moietv of the 12-aminolauric acid. (c) 2005 Wiley Periodicals, Inc.