High impact polystyrene/organically modified layered silicate (HIPS/OLS) nanocomposites by in situ polymerization were synthesized to investigate the effect of clay on the particle size and properties of rubber. In the OLS, the montmorillonite having benzyl group showed best dispersion in polystyrene phase. With the addition of clay, the intercalated peak from XRB was confirmed, but the peak gradually shifted to lower angle as rubber concentration increased. Thus, it is speculated that the organoclay disperses better in rubber phase than in polystyrene phase. The average rubber particle size increased and the particle size distribution widened as the amount of clay increased, which may be caused by the increase of the viscosity ratio of rubber to polystyrene phases and the unstable dispersion. The materials having clay showed improved thermal properties from thermogravimetric analysis. Rheological properties such as complex viscosity and storage modulus increased as the amount of clay increased.