A series of projectile impact tests have been carried out on cross ply carbon/epoxy and different weight percentages (1%, 3% and 5%) of nanoclay dispersed in the carbon/epoxy laminated composites of two different thicknesses (3 mm and 5 mm) with a 9.8 mm diameter hemispherical shaped mild steel projectile for determining the ballistic limit, residual velocity and energy absorption. Velocities far higher than the ballistic limit such as 165 m/s, 195 m/s and 220 m/s are considered for investigation of damage mechanisms. The traditional CFRP composites show poor impact resistance due to their negligible plastic deformation as compared to metals. The impact performance of these composites can be enhanced by the clay effect. The optimum clay content is proposed in the present investigation. There is a significant improvement in impact properties, as the clay content increases from 0 wt% to 3 wt% but beyond 3 wt% of clay, the properties degrade which is due to the high stress concentrations attributed to the clay clustering in the higher clay content. The X-ray computed tomography (X-ray CT) scanning analysis which is an advanced non-destructive technique (NDT) is used to investigate the internal defects such as delamination and porosity of impact damaged specimens whereas fiber breakage and matrix cracks are seen in scanning electron microscopy (SEM) images. © 2018 Elsevier Ltd.