Conductive nanocomposites were synthesized from surface modified clay and polypyrrole grafted triblock copolymer, polystyrene-b-poly(ethylene-co-butylene)-b-polystyrene (SEBS-g-PPy). The grafting of PPy was carried out on SEBS using FeCl3 as an oxidant and the formation of subsequent materials was monitored by IR, 1H NMR spectroscopy and Gel permeation chromatography (GPC). Surface treatment of the clay was carried out by ion exchange method using the cationic salt of 2,2-bis[4-(4-aminophenoxy)phenyl]propane for better adhesion with the polymer matrix. Thin composite films containing 1–8-wt.% organoclay were investigated by FTIR, XRD, TEM, tensile testing, TGA, DSC and electrical conductivity measurements. The molar mass as determined by GPC was around 37,000. XRD pattern and TEM images described good dispersion of clay platelets in the nanocomposites. Tensile testing revealed improvement in mechanical properties up to 3-wt.% of organoclay. The bulk electrical conductivity was increased up to 7-wt.% with increase in resonance of delocalized electrons of stretched PPy chains due to hydrogen bonding with organoclay in the nanocomposites. Thermal decomposition temperatures of the nanocomposites were in the range 435–448 °C. The decomposition of the nanocomposites was observed at higher temperatures relative to the pure polymer matrix with increasing clay loading. The weight retained after 900 °C was approximately equal to the amount of organoclay added in the composites. These composite materials exhibited improvement in glass transition temperature as compared to SEBS-g-PPy.