Poly(lactic acid)/organo-montmorillonite (PLA/OMMT) nanocomposites toughened with maleated styrene-ethylene/butylene-styrene (SEBS-g-MAH) were prepared by melt-compounding using co-rotating twin-screw extruder followed by injection molding. The dispersibility and intercalation/exfoliation of OMMT in PLA was characterized using X-ray diffraction and transmission electron microscopy (TEM). The mechanical properties of the PLA nanocomposites was investigated by tensile and Izod impact tests. Thermogravimetric analyzer and differential scanning calorimeter were used to study the thermal behaviors of the nanocomposite. The homogenous dispersion of the OMMT silicate layers and SEBS-g-MAH encapsulated OMMT layered silicate can be observed from TEM. Impact strength and elongation at break of the PLA nanocomposites was enhanced significantly by the addition of SEBS-g-MAH. Thermal stability of the PLA/OMMT nanocomposites was improved in the presence of SEBS-g-MAH. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci, 2012