The orientational photorefractive effect was observed in an organic-inorganic nanocomposite of nematic liquid crystal hybridized with montmorillonite clay. Both the self-diffraction and beam-coupling effects were evaluated in a two-wave-mixing experiment in conjunction with an externally applied dc field. The experimental results indicate that photoinduced generation was enhanced by the addition of smectite clay with adequate concentration. Physically, the drifting ion charges were trapped by clay layers and separated by interlayer cations, creating an internal, spatially modulated space-charge field, which led to nematic molecular orientation and, then, refractive-index modulation via the electro-optical response. The diffraction efficiency as well as the beam-coupling ratio of the phase gratings recorded in the cells of the nematic liquid crystal hybridized with montmorillonite clay was found to be two to three times higher than that in the pristine nematic cell.