This study investigates the preparation, characterization, and mechanical properties of nanocomposites prepared from poly(lactic acid) (PLA), an organoclay, hereafter referred to as Clay, and poly(e-caprolactone) (PCL) by melt compounding in a co-rotating type, twin screw extruder. The molecular weight of the PCL used was 10K, 40K, or 70-100K. Tensile test data show that the Young's modulus of the PLA/Clay nanocomposite was about 19% higher than that of neat PLA. The tensile strength of the PLA/PCL(10K and 40K)/Clay nanocomposites was about 17% higher than that of neat PLA. On the other hand, the tensile strength of the PLA/PCL(70-100K)/Clay sample was about 7% lower than that of neat PLA. The elongation of the PLA/PCL/Clay composite also improved. The effect of d-spacing, resulting from adding PCL to the PLA/Clay nanocomposite, depends on the molecular weight of the PCL. The size of the clay agglomerates in the PLA/PCL/Clay nanocomposites is larger than those found in the PLA/Clay. Furthermore, the thermal stability of the PLA/Clay nanocomposite increases with the addition of PCL. On the whole, PCL(10K) was found to be the best additive for PLA/ Clay nanocomposites.