A representative pesticide, NeemAzal was encapsulated into polyvinyl alcohol/alginate-montmorillonite (PVA/Alg-MMT) nanocomposite by cross-linking with glutaraldehyde. Different formulations of capsule beads containing NeemAzal were prepared with different concentration of materials. Evidence of cross-linking of PVA and Alg was obtained by comparison of the Fourier transform infrared spectra of the initial substrates and capsule beads. X-ray diffraction and transmission electron microscopy techniques confirmed the intercalated structure of capsule bead nanocomposites. In addition the swelling behavior of capsule beads was investigated. Results showed that swelling ratio of capsule beads decreases with introduction of MMT as well as increase of PVA content in capsule bead formulations. The release characteristics of NeemAzal from capsule beads were monitored using UV-visible spectrophotometer in distilled water. The addition of sodium MMT to these formulations was found to have a profound inhibitory effect on the release of NeemAzal. Furthermore, the release data were fitted to several empirical equations to estimate the kinetic parameters. The NeemAzal encapsulated PVA/Alg-MMT nanocomposite capsule beads, designed and discussed in this work, have the potential for controlled release of pesticide. POLYM. ENG. SCI., 54:2707-2714, 2014. (c) 2013 Society of Plastics Engineers