Montmorillonite reinforced polymers are a new development in the area of nanocomposite materials. Since reinforcement of epoxy is important to the development of high strength adhesives and composite matrices, the introduction of montmorillonite to epoxy is of interest. Compositional effects on epoxy reactivity, on molecular relaxation, and on mechanical properties were investigated. Change in reactivity was determined by Differential Scanning Calorimetry. Tensile properties at room temperature indicated improved modulus and retention of strength of the epoxy matrix but a decreased elongation to failure. Depression of dry nanocomposite glass transition was observed for nanocomposites beyond 5% by weight montmorillonite. Samples that were saturated with water showed lower moduli due to the epoxy matrix. The greatest moisture absorption rate was found at 7%, the least at 3%.