In this study, the effect of nanoclay on some applied properties of oriented strand board (OSB) made from underutilized low quality paulownia wood was investigated. Organo-modified montmorillonite (MMT) at four levels (0, 1, 3 and 5 %) was added to urea formaldehyde (UF) resin. Some chemical properties of paulownia wood (holocellulose, cellulose, lignin and ash contents, pH value and hot and cold water solubility), mechanical [modulus of rupture (MOR), modulus of elasticity (MOE), internal bond strength, screw and nail withdrawal strengths], physical (water absorption and thickness swelling) properties and formaldehyde emission of the strand boards were evaluated. Mechanical properties of all panels complied with the general-purpose OSB minimum property requirements of European Norm. With increasing 5 % nanoclay to UF resin, mechanical and physical properties of the resulting panels improved and formaldehyde emission decreased. However, none of the panels satisfied the thickness swelling and water absorption requirement. The results of X-ray diffraction and transmission electron microscope analysis confirmed the good dispersion of nanoclay in the resulting OSBs. Using paulownia as a fast-growing underutilized species not only can sustain the forests but also can supply raw material to countries facing shortage of wood.