An interpenetrating networks of varying weight percentages (5, 10, and 15%) of caprolactam-blocked methylenediphenyl diisocyanate(CMDI)-toughened epoxy matrices were developed and characterized. The toughened epoxy system was further modified with 1, 3, and 5% (by wt) of organophilic montmorillonite (MMT) clay. Organoclay-filled hybrid CMDI-epoxy matrices, developed in the form of castings, were characterized for their thermomechanical properties. The data obtained from differential scanning calorimetry and dynamic mechanical analysis showed that there was a significant loss in the values of glass transition temperatures (T g ) of organoclay-filled hybrid epoxy systems when compared with that of neat epoxy resin, whereas increasing trend in thermal stability was observed. The values obtained from mechanical studies indicated that the CMDI-toughened epoxy and organoclay-filled CMDI-epoxy systems were improved the mechanical properties according to its percentage concentration. From X-ray diffraction analysis, it was observed that the presence of d 001 reflections of the organophilic MMT clay in the CMDI-toughened epoxy systems indicated the development of intercalated clay structure which in turn confirmed the formation of intercalated nanocomposites. Homogeneous surface morphologies of CMDI-toughened epoxy and organoclay-filled CMDItoughened epoxy systems were ascertained from scanning electron microscope. POLYM. ENG. SCI., 49:747-755, 2009. ª