Poly(L-lactide) (PLLA)/poly(butylene succinate-co-butylene adipate) (PBSA) blends were compounded with Cloisite 25A((R)) (C25A) and C25A functionalized. with epoxy groups, respectively. Epoxy groups on the surface of C25A were introduced by treating C25A with (glycidoxypropyl)trimethoxy silane (GPS) to produce so called Twice Functionalized Organoclay (TFC). Variation of morphology and properties of PLLA/PBSA/C25A composites was investigated before and after the treatment with GPS. The morphological structure of the composites was analyzed by using X-ray diffractometry (XRD) and transmission electron microscopy (TEM). The silicate layers of PLLA/PBSA/TFC were exfoliated to a larger extent than PLLA/PBSA/C25A. Incorporation of the epoxy groups on C25A improved significantly elongation at break as well as tensile modulus and tensile strength of PLLA/PBSA/C25A. The larger amount of exfoliation of the silicate layers in PLLA/PBSA/TFC as compared with that in PLLA/PBSA/C25A was attributed to the increased interfacial interaction between the polyesters and the clay due to chemical reaction. Thermo gravimetric analysis revealed that both T-5%, which was the temperature corresponding to 5% weight loss, and activation energy of thermal decomposition of PLLA/PBSA/TFC were far superior to those of PLLA/PBSA/C25A as well as to those of PLLA/PBSA, indicating that the composites with exfoliated silicate layers were more thermally stable than those with intercalated silicate layers. (C) 2005 Wiley Periodicals, Inc.