In the preparation of polymer-clay nanocomposites the chemical incompatibility between the clay surface and polyolefins can be overcome by using clays organically modified with short chain organic cations. The compatibility can be further enhanced by using functionalized polymer that wets the clay surface while being miscible with the non-polar polymer matrix. In this work we tried to modify the host polymer polypropylene (PP) by irradiating it with gamma-rays in air knowing that it undergoes oxidation and chain scission simultaneously. Thus lower molecular weight PP with highly polar surface due to oxidation can be expected to play double role of clay modifier and functional compatibilizer. This has been observed to be the case. Finely ground PP granules were irradiated in air in a ⁶⁰Co γ-irradiator at the dose rate of 0.08 kGy/h (low dose rate to enhance oxidation) to 5, 10, and 20 kGy total doses. The extent of oxidation and change in molecular weight were determined by ATR-FTIR and Melt Flow Rate measurements respectively. PP/MMT nanocomposites were prepared by using 20% γ-PP, 1-5 % MMT and pristine PP to make up the total 100 in a torque rheometer. Maleated PP was also used in similar quantities to compare the effectiveness of γ-PP as a compatibilizing agent. Nanocomposites prepared with 10 kGy irradiated PP was found to show optimum mechanical properties among all formulations, with 26% increase in E-modulus and 10% increase in tensile strength as compared to pristine PP. Ternary PP nanocomposites were characterized by XRD, SAXS and PALS studies.