The use of vegetable-oil-based polymeric plasticizers with nanotechnology can create new applications for plasticized poly(vinyl chloride) (PVC). Epoxidized Mesua ferrea L. (Ceylon Ironwood) seed oil was used as a plasticizer for PVC. Further, nanocomposites were prepared through an ex-situ technique using epoxidized-oil-swelled organically modified montmorillonite (5 wt%) and PVC. Notable improvement in thermal and processing characteristics of the nanocomposites was observed over those of the virgin polymer (in both unplasticized and plasticized PVC), as studied by TGA. The prepared nanocomposites were characterized by FTIR, SEM, TEM, and XRD techniques. A dramatic decrease in viscosity (7-fold) was observed in THF for a 10% solution of epoxidized-oil-modified PVC compared to unplasticized PVC in THF, as measured by Brookfield viscometer. Isothermal analysis at three different temperatures (100, 150, and 200°C) reveals sufficient stability of the epoxidized oil modified PVC nanocomposites, as confirmed by gravimetric and FTIR analysis. Augmentation of thermostability and good retention of mechanical properties of the (Mesua ferrea L.)-plasticized-PVC/clay nanocomposites with respect to rigid PVC vouch for the utility of the former as advanced industrial materials. J. VINYL ADDIT. TECHNOL., 18:168–177, 2012. © 2012 Society of Plastics Engineers