In this study, benzylated bamboo flour (BBF) was synthesized using benzyl chloride under mild conditions. This material can be added to medium density polyethylene (MDPE) as a reinforcing filler material. The crystal structure and properties of the BBF and corresponding BBF/MDPE panels were investigated by Fourier transform infrared spectroscopy, X‐ray diffraction, scanning electron microscopy, energy dispersive X‐ray spectroscopy, mechanical tests and surface hydrophobicity measurements, and the obtained results are in good agreement. According to the scanning electron microscopy and X‐ray diffraction investigations, the crystal structure of the bamboo material disappeared after the addition of benzyl chloride. The Fourier transform infrared spectroscopy analysis provided further evidence for the successful benzylation. The intensity of the bands attributed to the O—H stretching or deformation vibrations decreased, and the intensity of the bands attributed to the C = O and C—O bonds in the benzyl group increased, which was confirmed by the X‐ray spectroscopy analysis. The volume fraction of the dispersed phase increased dramatically, and the interfacial fusion between the BBF particles and the MDPE matrix improved. The tensile strength and flexural strength of the prepared BBF/MDPE panels were up to 24.21% and 26.73% higher, respectively, compared with panels fabricated from unmodified bamboo flour. Furthermore, the surface hydrophobicity was found to be higher, which confirmed the good interface fusion. The strengthening mechanism is discussed in this paper, and the overall results suggest that BBF is a promising candidate material for the substitution of traditional wood fibers and unmodified bamboo flour in wood plastic composites. Copyright © 2015 John Wiley & Sons, Ltd.