Low density polyethylene nanocomposites were prepared by melt intercalating maleic anhydride grafted polyethylene and montmorillonite clay. It has been found that maleic anhydride has promoted strong interactions between polyethylene and montmorillonite, leading to the homogeneous dispersion of clay layers. Rheological experiments revealed that prepared nanocomposites exhibited shear thinning behaviour. Polyethylene nanocomposites exhibited an increase in steady shear viscosities compared to virgin polyethylene owing to strong polymer clay interactions. The tensile strength of nanocomposites was improved but elongation at break decreased considerably. Also, barrier properties improved significantly with montmorillonite content.