In this article, biodegradable poly(epsilon-caprolactone)/layered silicate nanocomposites were prepared and characterized. The dispersion state of modified clay in PCL matrix and its effect on thermal, rheological and mechanical properties of PCL were studied. The PCL/clay nanocomposites were then foamed using chemical foaming method. Cellular parameters such as mean cell size, cell wall thickness and cell densities of nanocomposite foams with different clay loading were collected. Effect of layered silicate on the structure and mechanical properties of PCL foams were evaluated. (C) 2009 Wiley Periodicals, Inc. J Appl Polym Sci 115: 31203129, 2010