Toughened nanocomposite materials are prepared based on a blend of one or more thermoplastic engineering resins, e.g., nylon, a functionalized, e.g. brominated, copolymer of a C4 -C7 isomonoolefin, e.g. isobutylene, and a para-alkylstyrene, e.g. para-methylstyrene, and further contain a uniformly dispersed exfoliated phyllosilicate layered clay, e.g., montmorillonite. The nanocomposite materials exhibit superior mechanical properties, including enhanced impact strength.