Solid state shear compounding technology (S3C) based on pan-milling is an effective method to prepare polymer/layered mineral composites with nano intercalating structure. The PVC/Kaolin compounding powders were successfully prepared by pan-milling at ambient temperature, and then the PVC/Kaolin nanocomposites were processed by moulding The structure and properties of PVC/Kaolin compounding powder and nanocomposites were investigated by X-ray Diffraction (XRD), Scanning Electron Microscopy (SEM), Transmission Electron Microscopy (TEM) and mechanical tests. The results showed that the mechanical properties of PVC/Kaolin nanocomposites prepared through S3C based on pan-milling 30 cycles at ambient temperature including elongation, tensile strength and notched impact strength were remarkably improved compared with conventional filled composites. The elongation of PVC / Kaolin nanocomposites with 4 %wt. Kaolin was 274.6%, which is 187.3 % higher than that for a conventional filled composite. The tensile strength was 54.0 MPa, which is 6.3 MPa higher than that for a conventional filled composite. The tensile strength of the nanocomposites with 8 %wt. Kaolin was 57.5 MPa, which is 9.1 MPa higher than that for a conventional filled composite. At the same time, the notched impact strength was 4.9 kJ/m2, which is 1.0 kJ/m2 higher than a conventional filled composite. Strengthening and toughening for PVC were synchronously realized. XRD, SEM and TEM verified that S3C based on pan-milling realized synchronously pulverizing, dispersion and compounding of PVC with kaolin Through 25-30 cycles pan-milling, PVC and Kaolin powders imbedded each other and made into uniform PVC/Kaolin compounding powders and nanocomposites. The strip flake of Kaolin particles with thickness less than 50 nanometer and the aspect ratio of 10 times dispersed homogeneously in the PVC matrix.