In this study, the orientation, mechanical as well as the optical properties of multilayer films of nanoclay filled poly (lactic acid) (PLA) as the core layer and polyethylene (PE) as the skin layer obtained from the film blowing process were investigated. The effect of nanoclay content in the range of 1-7.5 wt% was considered. The orientation of the polymers crystal unit cells, alignment of clay platelets as well as the extent of intercalation and exfoliation were studied using wide angle X-ray diffraction (WAXD). The measurement of d-spacing of the 001 plane (normal to platelets plane) of the clay tactoids indicated intercalation of the silicate layers in the PLA nanocomposite multilayer films. The Young modulus and tear resistance along the machine and transverse directions (MD and TD, respectively) improved significantly with the presence of the nanoparticles and percentage of nanofiller studied. The haze of the nanocomposite films decreased with clay concentration up to 5 wt% and increased by further addition of the nanoclay. POLYM. ENG. SCI., 51: 2151-2158, 2011. (C) 2011 Society of Plastics Engineers