A systematic investigation of the rheological and thermal properties of nanocomposites prepared with poly(lactic acid) (PLA), poly(butylene succinate) (PBS), and organically modified layered silicate was carried out. PLA/PBS/Cloisite 30BX (organically modified MMT) clay nanocomposites were prepared by using simple melt extrusion process. Composition of PLA and PBS polymers were fixed at a ratio of 80 to 20 by wt % for all the nanocomposites. Rheological investigations showed that high clay (> 3 wt %) contents strongly improved the viscoelastic behavior of the nanocomposites. Percolation threshold region was attained between 3 and 5 wt % of clay loadings. With the addition of clay content for these nanocomposites, liquid-like behavior of PLA/PBS blend gradually changed to solid-like behavior as shown by dynamic rheology. Steady shear showed that shear viscosity for the nanocomposites decreased with increasing shear rates, exhibiting shear-thinning non-Newtonian behavior. At higher clay concentrations, pseudo-plastic behavior was dominant, whereas pure blend showed almost Newtonian behavior. Thermogravimetric analysis revealed that both initial degradation temperature (at a 2% weight-loss) and activation energy of thermal decomposition nanocomposite containing 3 wt % of C30BX were superior to those of other nanocomposites as well as to those of PLA/PBS blend. Nanocomposite having 1 wt % of C30BX did not achieve expected level of thermal stability due to the thermal instability of the surfactant present in the organoclay. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 114: 2837-2847, 2009