In this study, organically modified montmorillonite composites of poly(lactic acid)-poly(ethylene glycol) (PLA-PEG) blends involving 10,15 and 20 wt% PEG were prepared. The characterization of the composite systems was conducted with various techniques such as gel permeation chromatography (GPC), X-ray diffractometry (XRD), transmission electron microscopy (TEM), differential scanning calorimetry (DSC), thermogravimetry analysis (TGA), and direct pyrolysis mass spectrometry (DP-MS) in addition to tensile testing. PLA-PEG blend nano composites showed improved tensile strength and modulus upon incorporation of organoclay into the blend. The plasticization effect of PEG was detected in DSC analyses. DP-MS analyses pointed out that loss of low mass fragments occurred at low temperatures, leaving thermally stable chains crosslinked by the chemical interactions between PLA and PEG which were enhanced in the presence of C30B.