Biodegradable nanoscale-reinforced starch-based products were prepared from an in situ chemically modified thermoplastic starch and poly(butylene adipate-co-terephthalate) (PBAT) through reactive processing. Natural montmorillonite (hydrophilic Cloisite Na) and organophilic Cloisite 30B were studied. In situ chemically modified thermoplastic starch (MTPS) was first prepared starting from (nano) clay (previously swollen in glycerol as plasticizer), and maleic anhydride (MA) as an esterification agent. Then, these nanoscale-reinforced MTPS was reactively melt-blended with PBAT through transesterification reactions promoted by MA-derived acidic moieties grafted onto the starch backbone. The tensile and barrier properties of resulting (nano) composites were studied. High-performance formulations with superior tensile strength (>35 MPa as compared with 16 MPa for the PBAT-g-MTPS copolymer) and break elongation (>800%) were obtained, particularly with Cloisite30B. Better water vapor and oxygen barrier properties of nanoscale-reinforced MTPS-g-PBAT were achieved rather than the PRECURSORS. Wide angle X-ray diffraction and transmission electronic microscopy analyses show that partial exfoliation of the clay platelets was observed within the PBAT-g-MTPS graft copolymer-Cloisite 30B nanocomposite. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci 122: 639-647, 2011