Chitosan-based nanocomposite films were prepared using a solution intercalation method incorporating varying amounts of organically modified montmorillonite (Cloisite 30B) from 0 to 30 wt%. The nanocomposite films prepared were optically clear despite a slight decrease in the transmittance due to the spatial distribution of nanoclay. X-ray diffraction patterns indicated that a certain degree of intercalation or exfoliation formed when the amount of clay in the film was low and that microscale tactoids formed when the clay content in the sample was high (more than 10 wt%). The tensile strength (TS) of the chitosan film increased when the clay was incorporated up to 10 wt% and then decreased with further increases in the clay content of the film. The elongation at break (E) increased slightly upon the addition of low levels of clay up to 5 wt% and then decreased with further increases in the amount of the clay in the film. The water vapor permeability (WVP) decreased exponentially with increasing clay content. The water solubility (WS) and swelling ratio (SR) of the nanocomposite films decreased slightly, indicating that the water resistance of the chitosan film increased due to the incorporation of the nanoclay.