A novel approach for synthesis of CdS-intercalated nanocomposites was investigated by thermal decomposition of cadmium thiourea complex embedded in the interlayer of montmorillonite. XRD results indicated that the incorporation of CdS into the interlayer of montmorillonite led to expansion of the layer spacing. The diffuse reflectance UV-visible spectra showed that the absorption edge of nanocomposites of CdS and montmorillonite was blue-shifted as compared with pure CdS due to quantum size effect. The photoelectric performance of nanocomposites was evaluated by photocatalytic water-splitting for production of hydrogen and the nanocomposites displayed much higher photocatalytic activities of H2 production than that of pure CdS owing to the synergistic effects between CdS and montmorillonite. A probable photocatalytic mechanism was proposed.