Disclosed is a nanocomposite comprising a nano-reinforcing material (e.g., layered clay), a polymer matrix (e.g., a polyolefin), and, an epoxy-functionalized graft polymer compatible with the polymer matrix (e.g., epoxy-grafted polyolefin). Such nanocomposites are useful in the fabrication of a variety of materials including parts for the transportation and packaging industries, electronics, business equipment, building and construction materials.