The mechanical, thermal, and morphological properties of melt compounded aminopropylisobutyl-polyhedral oligomeric silsesquioxane (POSS)/poly(lactic acid) (PLA) and poly(ethylene glycol) (PEG)-plasticized PLA composites were investigated. It was found that the addition of POSS to the PLA reduced the melt viscosity of the composites acting as a lubricating agent. Dynamic mechanical analysis and tensile tests showed that the modulus and elongation at break values improved at low (1% and 3%) POSS loading levels. Scanning electron microscopy observation indicated that POSS particles were well dispersed in both PLA and plasticized PLA. The interfacial interaction of POSS with the polymer matrix was found to be better in the presence of plasticizer. The presence of POSS also affected the thermal properties of the PLA and plasticized PLA. It was revealed from DSC that POSS particles acted as a nucleating agent for PLA. Moreover, the percent crystallinity was found to be higher in the presence of POSS for both PLA and plasticized PLA. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci 121: 1067-1075, 2011