To prevent cement sheath damage, a robust cement sheath is required to ensure long-term integrity and stability of the well from the imposed stresses. Successful completion of cementing job has become more complex, as drilling is being carried out in high pressure high temperature (HPHT) wells. Recently, application of nanomaterials in enhanced oil recovery, drilling fluid, oil well cementing and other applications are being explored. This paper presents the outcomes of an experimental study conducted to investigate the effect of nanoclay as an additive on the properties of Type G cement slurry under HPHT conditions. An organically modified nanoclay in which natural montmorillonite is modified with a quaternary ammonium salt is used in a cement mix, typically used in the Saudi Arabian oil field under HPHT conditions. Nanoclay based cement mixes were prepared with 1%, 2% and 3% BWOC nanoclay, along with silica flour, and other chemical admixtures. Development of compressive strength properties, microstructural studies using SEM and XRD techniques and permeability and porosity studies were conducted. It was observed that nanoclay at 1%BWOC reduced the permeability and porosity and enhanced the compressive strength with the accelerated strength development at early ages. A crystal product that is interweaved and joined together to build strong and well-proportioned structure is developed in the harden cement paste. The smaller size particles fill the capillaries of the cement paste that resulted in a dense structure of the matrix. In addition, this novel slurry formulation with low permeability and porosity and high compressive strength, is suitable in zones where the possibility of gas migration is very high.