Novel blend membranes containing S-PVA and PEBAX 1657 with a blend ratio of 8:2 (referred to as SPP) were prepared using a solution-casting technique. In the manufacturing process, sulfonated montmorillonite (S-MMT) in ratios of 0%, 3%, 5%, and 7% was used as a filler. The crystallinity of composite membranes has been investigated by X-ray diffraction (XRD), while the interaction between the components was evaluated using Fourier-transform infrared spectroscopy (FT-IR). With increasing filler content, good compatibility between the components due to hydrogen bonds was established, which ultimately resulted in improved tensile strength and chemical stability. In addition, due to the sulfonated moieties of S-MMT, the highest ion exchange capacity (0.46 meq/g) and water uptake (51.61%) can be achieved at the highest filler content with an acceptable swelling degree of 22.65%. The composite membrane with 7% S-MMT appears to be suitable for application in proton exchange membrane fuel cells (PEMFCs). Amongst the membranes studied, this membrane achieved the highest current density and power density in fuel cell tests, which were 149.5 mA/cm2 and 49.51 mW/cm2. Our fluorine-free composite membranes can become a promising new membrane family in PEMFC applications, offering an alternative to Nafion membranes.