Nanocomposite films containing up to 50 wt. % laponite have been prepared from emulsion polymerized polystyrene (PS)/laponite latexes with the laponite attached to the PS particle surfaces. Below Tg, the observed stiffness increases are accounted for by classical models for mechanical reinforcement, but these severely underestimate the stiffness above Tg. An alternative model has therefore been proposed, in which the laponite and PS with reduced mobility form a cellular network, consistent with TEM observations. This cellular network is also argued to play an important role in the decrease in fracture resistance at high laponite contents, through decreases in matrix ductility and breakdown of the laponite stacks.