Organically modified montmorillonite (OMMT) clay was intercalated with low-molecular weight polyethylene glycol (PEG) oligomer at melt stage. The intercalation behaviour of PEG into the OMMT clay galleries and its interaction with clay platelets were characterized with X-ray diffraction (XRD) and differential scanning calorimetric techniques. A natural rubber (NR)-organoclay nanocomposite (NROCN) was prepared by melt-compounding of NR with PEG-treated organoclay (P-OMMT) and other compounding chemicals using a laboratory-scale internal mixer. XRD analysis of the nanocomposites revealed the intercalation of NR molecules into the P-OMMT clay galleries and subsequent exfoliation during the melt-compounding process. Vulcanization characteristics of the NROCN, especially processing safety and optimum curing time, have been interpreted with reference to the organic modifier of the montmorillonite clay, PEG modification and the degree of exfoliation. Solid-state mechanical properties of P-OMMT clay-filled NROCN vulcanizates have shown a significant enhancement in stiffness and strength characteristics whilst without scarifying the elasticity of the nanocomposites. Results have been explained in terms of the degree of exfoliation, dispersibility of the organoclay and strain-induced crystallization of the natural rubber.