Polymer-clay nanocomposites are attracting global interest principally because property enhancements are obtained at low clay particle loadings (1-5 wt%). However there is lack of fundamental understanding of such composites. The aim of this work is to provide an insight into the interaction between polymer and clay. This includes the driving force for intercalation, the reinforcement mechanisms and property-volume fraction relationships. Functionalised poly(ethylene glycol)-clay, poly(c-caprolactone)-clay and thermoplastic starch-clay nanocomposites with a range of polymer molecular weights, clay volume fractions and with different clays were prepared using solution methods, melt-processing methods, and in situ polymerisation. A reliable X-ray diffraction technique for low angle basal plane spacing of clay, the essential parameter for structure determination, was established obtaining ±0.005 Mn between three diffractometers. The basal plane spacing was found to be unaffected by polymer molecular weight and preparation method but was affected by the nature of the polymer and clay. Increasing clay loading could lead to a lower spacing. As a cautionary observation, poly(ethylene glycol) with high molecular weight (2: 10,000) was found to undergo degradation readily during preparation of nanocomposites with and without clay. Competitive sorption experiments for molecular weight showed that high molecular weight fractions of polymer intercalate preferentially into clay during solution preparation. Thermodynamic studies on the intercalation process found that significant enthalpic change occurred during intercalation, which is coincident with the observation that heat-treated clays without interlayer water can intercalate polymer. The calculation of true volume fraction against nominal volume fraction provided reasonable explanation of property enhancement and helps understand the relation between nanocomposites and conventional composites. At a given clay loading, nanocomposites with better dispersion gave more property enhancement than those with lower dispersion or conventional composites. The crystallinity of semicrystalline polymer was also affected by varying extents of dispersion of clay. The use of X-ray diffraction with an internal standard was explored for quantitative analysis of intercalation and exfoliation.