Layered double hydroxides (LDH) are two‐dimensional nanostructured materials, which impart flame retardancy property and improvement in various properties on incorporation into the polymer matrix. In this study, Ni‐Al LDH with a molar ratio of 2:1 and 3:1 (2NiAl and 3NiAl) was prepared by co‐precipitation method and Ni‐Al LDH with a molar ratio of 2:1 (NiAl urea) was also synthesized by the urea hydrolysis method. As the d‐spacing of these as‐synthesized LDHs is very small (≈0.8 nm) as well as hydrophilic in nature, hence, the unmodified LDHs are unsuitable for polymer nanocomposite preparation. In order to enhance the d‐spacing of LDHs, a simple regeneration method was employed to organically modify LDHs using two anionic surfactants such as sodium dodecyl benzene sulfate (SDBS) and sodium dodecyl sulfate (SDS). The hydrophobic tail of these anionic surfactants replaced the nitrate ions present in the unmodified LDHs leading to higher d‐spacing value, which was evident from XRD analysis. The above prepared LDHs (3 wt%) were incorporated into PS matrix by the solvent blending method to make PS nanocomposites. The 003 peak of modified LDHs did not appear in the XRD pattern of PS nanocomposites due to the disorientation of LDH layers in the PS matrix that was confirmed by TEM analysis. The TGA results clearly demonstrated that the thermal stability of the PS nanocomposite samples was increased by 26, 22 and 22 °C (PS/2NiAl SDS, PS/3NiAl SDS, and PS/NiAl urea SDS) for SDS modified LDH fillers, while in the case of SDBS modified LDH fillers, the improvement was around 32 °C in comparison with PS, when 15% weight loss was taken as a reference. The degradation mechanism, thermal degradation kinetics, and integral procedural decomposition temperature (IPDT) for all the nanocomposite systems were also evaluated using Criado method, Coats‐Redfern method, and Doyle's method, respectively. The effect of dispersion of the modified LDH fillers into PS matrix was examined using melt rheological analysis.