Polyethylene terephthalate (PET) nanocomposite films were prepared by cast extrusion followed by uniaxial stretching, using chill rolls. Transmission electron microscopy (TEM) and wide angle X-ray diffraction (WAXD) showed that the clay layers were aligned in the machine direction (MD) in the PET/clay nanocomposite (PCN) films. Differential scanning calorimetry (DSC) showed that PCN films have higher crystallinity than the neat PET films, possibly due to the nucleating role of the silicate layers. The PCN films became hazier as the clay content increased, but the film transparency remained in the acceptable range. Oxygen permeability of the PCN films decreased by 23% compared to the neat PET film. This is comparable with predictions of models proposed in the literature. Silicate incorporation brought about 20% increase in the tensile modulus, while the puncture and tear propagation resistance were reduced, due to brittleness of the PCN films. The measured modulus (1.7 GPa) was somewhat smaller than the values predicted using the Pseudoinclusion model (2.1 GPa). POLYM. ENG. SCI., 2012. (C) 2011 Society of Plastics Engineers