Intercalated nanocomposites of modified montmorillonite clays in a glassy epoxy were prepared by crosslinking with commercially available aliphatic diamine curing agents. These materials are shown to have improved Young's modulus but corresponding reductions in ultimate strength and strain to failure. These results are consistent with most particulate filled systems, The macroscopic compressive behavior is unchanged, although the failure mechanism in compression varies from the unmodified samples. The fracture toughness of these materials is investigated and improvements in toughness values of 200% over unmodified resis are demonstrated. The fracture surface topology is examined using SEM and tappin-mode AFM and showm to be related to the clay morphology of the system.