Nano fuller's earth was prepared by milling and subsequent sonication of day. The polyvinyl alcohol (PVA) and PVA -Nano clay composite films were prepared by solution casting method. The films were characterized for their structural, mechanical, and thermal properties using electron microscopes (SEM, TEM), Tensile Tester, dynamic mechanical analyzer (DMA), thermo gravimetric analyzer (TGA), and Raman spectroscopy. The nanocomposite films showed improvement in mechanical properties, viscoelastic behavior as well as resistance towards thermal degradation. Uniform distribution of day due to intimate interaction between day and polymer appears to be the cause for improved properties. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 115: 3005-3012, 2010