Polylactic acid (PLA)/organo-montmorillonite (OMMT) nanocomposites toughened with thermoplastic polyurethane (TPU) were prepared by melt-compounding on a novel vane extruder (VE), which generates global dynamic elongational flow. In this work, the mechanical properties of the PLA/TPU/OMMT nanocomposites were evaluated by tensile, flexural, and tensile tests. The wide-angle X-ray diffraction and transmission electron microscopy results show that PLA/TPU/OMMT nanocomposites had clear intercalation and/or exfoliation structures. Moreover, the particles morphology of nanocomposites with the addition of TPU was investigated using high-resolution scanning electronic microscopy. The results indicate that the spherical TPU particles dispersed in the PLA matrix, and the uniformity decreased with increasing TPU content (<= 30%). Interestingly, there existed abundant filaments among amount of TPU droplets in composites with 30 and 40 wt% TPU. Furthermore, the thermal properties of the nanocomposites were examined with differential scanning calorimeter and dynamic mechanical analysis. The elongation at break and impact strength of the PLA/OMMT nanocomposites were increased significantly after addition of TPU. Specially, Elongation at break increased by 30 times, and notched impact strength improved 15 times when TPU loading was 40 wt%, compared with the neat PLA. Overall, the modified PLA nanocomposites can have greater application as a biodegradable material with enhanced mechanical properties. (C) 2013 Society of Plastics Engineers