The approach of processing reactive functional nanofillers into thermoplastic copolyester (TPE‐E) using reactive extrusion (REX) has been explored. The mixing of a hydroxyl‐bearing organo‐fluoromica combined in toluene with a tetraglycidyl‐4,4‐diamino‐diphenylmethane (TGDDM) led to the intercalation of the TGDDM molecule into the interlayer space. Subsequent REX work involved processing TPE‐E with 0.3% (w/w) TGDDM and 2% (w/w) organoclay in a twin‐screw extruder. It is demonstrated that the effects of the modification route to control morphology on the nanoscale could be systematically investigated. The hard segment acted as a physical crosslink, imparting elastomeric properties on the soft segment. Increases seen in creep resistance and reduction in the water vapor transmission rate of TPE‐E proved that the reactive organo‐fluoromica was able to promote enhanced dimensional stability and barrier properties of TPE‐E. © 2018 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2018, 135, 46369.