Antibacterial nanocomposite films of poly(butylene adipate‐co‐terephthalate) (PBAT) incorporated with different weight percentage of octakis(3‐chloropropyl)octasilsesquioxane (chloropropyl functionalized POSS [Cl‐fn‐POSS]) nanofiller were prepared. The mechanical, thermal, morphological, barrier, and antimicrobial properties were examined. The mechanical properties of the nanocomposite films were enhanced by the addition of Cl‐fn‐POSS nanofiller. An optimum filler loading of 3 wt% is identified to be best suited for maximum enhancement in tensile strength (24 MPa for 3 wt% filled PBAT vs 11 MPa for neat PBAT) while a 1 wt% filler loading was adequate to double the tensile strength. The barrier properties (WVTR and oxygen transmission rate) of PBAT was improved by the presence of Cl‐fn‐POSS. A volume of 3 wt% filler loading results in 50% reduction of water permeation and 10% reduction in oxygen transmission. The thermogravimetric analyses of the nanocomposites indicated that the filler enabled the enhancement of thermal stability of PBAT. The nanocomposite films revealed antimicrobial activity with this activity increasing with increasing filler content. PBAT is compostable under suitable conditions and with a low weight percentage of filler that is largely made of silicon dioxide these nanocomposite films can find application as biodegradable food packaging material given their flexibility.