Based on a "graft from" strategy, the surface of starch nanocrystals (StN) were functionalized by grafting with polycaprolactone (PCL) chains via microwave assisted ring-opening polymerization (ROP). The modified natural nanoparticles were then compounded into a PCL-based waterborne polyurethane as matrix. The structural and mechanical properties of the WPU/StN-g-PCL nanocomposites were characterized by XRD, FTIR, SEM, DSC, DMA, and tensile testing. It was interesting to note that a loading-level of 5 wt % StN-g-PCL resulted in a simultaneous enhancement of tensile strength and elongation at break, both of which were higher than those of neat WPU. This enhancement was attributed to the uniform dispersion of StN-g-PCL because of its nano-scale size, the increased entanglements mediated with grafted PCL chains, and the reinforcing function of rigid StN. Increasing the StN-g-PCL content however caused the StN-g-PCL to self-aggregate as crystalline domains, which impeded improvement in tensile strength and elongation at break, but significantly enhanced Young's modulus. (C) 2008 Wiley Periodicals, Inc. J Appl Polym Sci 111: 619-627, 2009