Montmorillonite clay modified with the ammonium salt of amine terminated amide oligomer was employed in the preparation of aromatic polyamide/organoclay nanocomposites. Organoclay prepared was examined for its dispersion behavior in the polyamide matrix. High-molecular-weight amide chains were synthesized from 4,4 0 -oxydianiline and isophthaloyl chloride in dimethylacetamide. These amide chains were selectively end-capped with carbonyl chloride end groups to interact chemically with modified montmorillonite clay. The resulting composite films containing 2-20 wt.% of organoclay were characterized for TEM, XRD, thin film tensile testing; TGA, DSC and water absorption measurements. The distribution of organoclay and nanostructure of the composites were investigated by XRD and TEM analyses. Results from mechanical testing revealed that modulus and strength improved up to 6 wt.% clay loading while elongation and toughness of nanocomposites increased with the addition of 2 wt.% clay content in the matrix. Thermal decomposition temperatures of the nanocomposites were in the range 300-450 °C. These nanocomposites exhibited increase in the glass transition temperatures relative to pristine polyamide depicting interfacial interactions between the two phases. The percentage water absorption of these hybrids was found to be much reduced upon the addition of modified layered silicate indicating decreased permeability.