This study describes the microstructure and thermal and mechanical properties of poly(hydroxybutyrate-co-hydroxyvalerate) (PHB/HV)-organoclay nanocomposites prepared by melt intercalation using Cloisite 30B, a monotallow bis-hydroxyethyl ammonium-modified montmorillonite clay. X-ray diffractometry and transmission electron microscopy analyses clearly confirm that an intercalated microstructure is formed and finely distributed in the PHB/HV copolymer matrix because PHB/HV has a strong hydrogen bond interaction with the hydroxyl group in the organic modifier of Cloisite 30B. The nanodispersed organoclay also acts a nucleating agent, increasing the temperature and rate of crystallization of PHB/HV; therefore, the thermal stability and tensile properties of the organoclay-based nanocomposites are enhanced. These results confirm that the organoclay nanocomposite greatly improves the material properties of PHB/HV. (C) 2003 Wiley Periodicals, Inc.