As an attempt to develop environmentally friendly polymer hybrids, biodegradable thermoplastic starch (TPS)/clay nanocomposites were prepared through melt intercalation method. Natural montrorillonite (Na+ MMT; Cloisite Na+) and one organically modified MMT with methyl tallow bis-2-hydroxyethyl ammonium cations located in the silicate gallery (Cloisite 30B) were chosen in the nanocomposite preparation. TPS was prepared from natural potato starch by gelatinizing and plasticizing it with water and glycerol. The dispersion of the silicate layers in the TPS hybrids was characterized by using wide angle X-ray diffraction (WAXD) and transmission electron microscopy (TEM). It was observed that the TPS/Cloisite Na+ nanocomposites showed higher tensile strength and thermal stability, better barrier properties to water vapor than the TPS/Cloisite 30B nanocomposites as well as the pristine TPS, due to the formation of the intercalated nanostructure. The effect of clay contents on the tensile, dynamic mechanical, and thermal properties as well as the barrier properties of the nanocomposites were investigated. (C) 2003 Kluwer Academic Publishers.