A published process for preparing expandable polystyrene containing water as a blowing agent was applied to synthesize water expandable polystyrene-organoclay nanocom- posites (WEPS-OCN). Organoclay was uniformly dispersed in styrene monomer. During suspension polymerization, water was trapped in the polystyrene (PS) matrix through the use of starch, ending up with spherical PS-organoclay beads. By selecting organoclays with various surfactants and modifier concentrations, different distribution states of nanoclay in the PS matrix, from cluster (poor dispersion) to either intercalated (limited dispersion) or exfoliated (full dispersion) were obtained. The incorporation of organ- oclay led to higher water content in the expandable beads. However, as expected, the flammability of the expanded product was increased with organoclay content. Further- more, the results showed that the average unexpanded bead size, density of preexpanded beads, foam cell morphology, and flammability were directly influenced by the disper- sion status of the organoclay. The best results were obtained when full dispersion (exfoliation) of nanoclay in PS matrix occurred.