A nanostructured electromagnetic polyaniline-polyhydroxy iron-clay composite (PPIC) was prepared by oxidative radical emulsion polymerization of aniline in the presence of polyhydroxy iron cation (PIC) intercalated clays. Morphological observation through SEM, TEM, and AFM Suggested the formation of self-assernbled nanospheres of PIC with self-assernbled PANI engulfed over PIC, and the presence of iron in PPIC was confirmed by the EDS analysis. XRD studies revealed that PPIC are comprised of exfoliated clay layers with PIC in the distorted spinel Structure. Magnetic property measurements showed that saturation magnetization increased from 7.3 x 10(-3) to 2.5 emu/g upon varying the amount of PHIC content from 0 to 10%. Electrical conductivity measurements with the same composition were observed to be in the range of 3.0 x 10(-2) to 1.1 S/cm. Thermal stability studies using TGA in combination with DTG suggested that PPICs were thermally stable up to 350 degrees C. The interaction among clay layers, PIC, and PANI chains in PPIC were manifested from the studies made by FTIR and DSC analysis. The prospects for the direct application of this material are developing low-cost chemical sensors and also processable electromagnetic interference shielding materials for high technological applications.