Solvent suspensions of a high performance polymer, Polyamide-imide (PAI) are widely used in magnetic wire coatings. Here we investigate the effect that the introduction of montmorillonite (MMT) has on PAI. MMT was introduced into an uncured PAI suspension; the sample was then cured by step-wise heat treatment. Polarized optical microscopy was used to choose the best suitable MMT for PAI matrix and to study the distribution of MMT in PAI matrix. Concentration dependent dispersion effect was studied by x-ray diffraction (XRD) and was confirmed by Transmission electron microscopy (TEM). Differential scanning Calorimetry (DSC) and Thermogravimetric analysis (TGA) was used to study impact of MMT on glass transition temperature (Tg) and degradation properties of PAI respectively. Micro-hardness testing of PAI nanocomposites was also performed. A concentration dependent state of dispersion was obtained. The glass transition (Tg), degradation and mechanical properties were found to correlate to the state of dispersion.