Solid electrolyte systems, especially solid polymer electrolyte systems have been widely used as potential technological applications in secondary energy sources and electrochromic devise nowadays. The ion-transport behavior of these systems is to be well understood to enhance electronic properties. It is apparent that these materials show ionic conductivity when ionic salts are dissolved in them. The mechanism of ionic mobility is still controversial. We have made an attempt to address these problems by choosing montmorillonite/poly(ethylene oxide)(PEO)/cation as a model system and systematically understanding the bonding, intercalation and ionic conductivity by Fourier Transformed Infrared Spectroscopy (FTIR), X-ray Diffraction (XRD) and AC-Impedance Spectroscopy respectively. The systems of Na + -montmorillonite, Li + -montmorillonite, and Li + -montmorillonite-PEO are characterized. The XRD data showed that the Na + -montmorillonite has a d-spacing of 15.49 Å attributing to the presence of Na + and two water layers within interlayers of MMT at room temperature. The removal of water brings the d-spacing to 9.97 Å. Solution intercalation of PEO into Li + -montmorillonite results in the enhancement of d-spacing up to 18.73 Å which readily takes up water, enhancing the d-spacing to 23.33 Å. These results show clearly that PEO is readily intercalated in montmorillonite at a composition of 6 wt% PEO, and leaching of PEO at successive washing takes place below 6 wt% of PEO. In the FT-IR spectrum of montmorillonite two types of ν (OH) are seen; isolated ν (OH) groups and those involved in hydrogen bonding. The Li + exchange decreases the extent of isolated hydroxyl groups, but the extent of H-bonding increases. This suggests that Li + is coordinated by the octahedral unit of the clay, through the O atoms (ions) of free Al-O-H groups. The ionic conductivity figures measured using AC-impedance analyzer is in agree with this bonding arrangement. It has been found that the intercalation of PEO in Li + -montmorillonite reverses the above process by the coordination of Li + ions with O atoms of PEO. The amount of free O-H then increases and the extent of hydrogen bonded O-H decreases.