In recent years, biodegradable polymer based nanocomposites have been used promisingly for various drug delivery systems and biomedical applications as compared to synthetic polymer composites because of the biocompatible and biodegradable behavior of natural polymers. These biodegradable polymer nanocomposites also show improved mechanical properties, swelling behavior, drug loading efficiency and controlled release behavior as compared to polymer matrices. The objective of the present study was to design and characterize nanocomposites based on hydroxyapatite and biodegradable polymer chitosan and montmorillonite clay. The nanocomposites were successfully prepared and their structures were characterized by powder x-ray diffraction (XRD), particle size analyzer (Beckman coulter), scanning electron microscopy (SEM), and fourier transmission infrared spectroscopy (FT-IR) techniques. FT-IR studies provided the evidence of molecular interaction among the constituents of the nanocomposite. SEM provided the shapes and surface topography of polymer nanocomposites. Particle size analyzer provides the intensity distributions and average size and polydispersity index of particles. XRD provided the information on the degree of hybrid structure generated and crystal size. The average diameters of particles in the nanocomposites were found to be below 500nm. This work represents the design of novel clay–chitosan– hydroxyapatite nanocomposite with improved properties that has potential applications in novel drug delivery.