PVC/Poly(epsilon-caprolactone) (PCL)/organophilic-montmorillonite (OMMT) and PVC/Polylactide (PLA)/OMMT nanocomposites were prepared by a two-step process. PCL/OMMT and PLA/OMMT master batches were prepared by melt blending using a two-roller mill first, and then they were blended with PVC via extrusion. PVC/OMMT nanocomposites were also prepared using a two-roller mill. Morphology, mechanical properties, and thermal stability were investigated. The formation of exfoliated or intercalated nanocomposites was confirmed by X-ray diffraction (XRD) and transmission electron microscopy (TEM). Only the PVC/PCL/OMMT nanocomposite showed both higher tensile strength and stiffness than unfilled PVC. Atomic force microscopy (AFM) indicated dependency of this behavior not only on the clay dispersion, but also on the adhesion between the OMMT and the polymer matrix. Furthermore, scanning electron microscopy (SEM) showed that the large plastic deformation of the PVC/PCL matrix also contributed to the strength increase of the PVC nanocomposites. The effect of PCL/OMMT on the improvement of the thermal stability of PVC was remarkable while the effect of PLA/OMMT was moderate. POLYM. ENG. SCI., 51:641-646,2011. (C) 2010 Society of Plastics Engineers