Poly(L‐lactic acid) (PLA) films are in use for various types of food packaging; however, a wider range of applications would be possible if the barrier properties of these films could be improved. To make such improvements, combinations of PLA with two nanofillers, laurate‐intercalated Mg‐Al layered double hydroxide (LDH‐C12) and a cationic organomodified montmorillonite (MMT) clay (Cloisite® 30B), were investigated. The dispersion of these fillers in PLA by melt processing was explored using two methods, either by mixing the nanofillers with PLA granulate immediately before extrusion or by preparation and subsequent dilution of PLA‐nanofiller masterbatches. After melt processing of these materials, PLA molecular weight, thermal stability, film transparency, morphology, and permeability characteristics were determined. Direct addition of LDH‐C12 drastically reduced the PLA molecular weight. Although this reduction in molecular weight was still very significant, it was less when a PLA/LDH‐C12 masterbatch was processed. In contrast, there was no significant reduction in PLA molecular weight when processing with Cloisite® 30B. However, film transparency was compromised when either LDH or MMT nanofillers were used. Evidence from DSC analyses showed a significant increase in heat of fusion when LDH‐C12 was dispersed in PLA compared with Cloisite® 30B, likely indicating a difference in nucleating properties. Complementary optical purity analyses suggested that racemization as a result of processing could influence the PLA crystallinity as determined by DSC in certain cases. A reduction in thermal stability when incorporating LDH‐C12 could be a direct result of PLA molecular weight reduction. XRD and TEM analyses showed that both Cloisite® 30B‐ and LDH‐C12‐based PLA composites yielded exfoliated and intercalated morphologies, but nanofiller agglomeration was also seen when LDH‐C12 was used. PLA/Cloisite® 30B nanocomposite films exhibited significant enhancement in oxygen and water vapor barrier properties, but no such improvement was found in PLA/LDH‐C12 nanocomposite films. © 2011 Wiley Periodicals, Inc. J Appl Polym Sci, 2011