Flame-retardant nanocomposites were prepared from diglycidylphenylphosphate (DGPP) and modified montmorillonite (MMT) clay blended with DGEBA in different ratio. T (g) of all formulations increased with increasing clay content in the respective series while decreasing with increasing DGPP content. The TGA, LOI, and UL-94 data of all nanocomposites indicated that the materials were thermally stable with high flame retardancy resulting from synergetic effect of phosphorus and inorganic clay. The XRD analysis of the nanocomposites with 1 and 2% of clay indicated the intercalation of clay while rest of the samples displayed exfoliation at high clay content. As compared to neat epoxy system, a maximum increase of 59.3, 45.5, and 93% of tensile, flexural, and impact strengths were observed for the prepared nanocomposites. The SEM analysis of the failure surfaces of all DGPP containing samples showed rough with ridge patterns and river markings on the fracture surface that serves in improving the mechanical properties.