Starch is an essential biopolymer in biofuel production and a sizing agent in the paper and textile industries. However, native starch is unsuitable for most applications due to brittleness, inferior mechanical and thermal properties, and poor processability. In this regard, a series of modified starch‐based biopolymer composites were prepared by extrusion to produce composites with enhanced properties for enlarged applications. Unlike other studies, the developed thermoplastic starch (TPS) in this work was produced by gelatinizing starch with glycerol and poly(butylene succinate) (PBS) to induce both plasticization and compatibilization. The resultant TPS was blended with diverse organoclays and polylactide (PLA) via a twin‐screw extruder to obtain TPS/PLA/organoclay composites. The ensuing composites were studied for thermal and morphology properties using thermogravimetric analysis (TGA), differential scanning calorimetry (DSC), scanning electron microscopy (SEM), and transmission electron microscopy (TEM). Results showed that the organoclay loading highly influenced the mechanical and thermal properties of the TPS/PLA composites by enhancing the thermal stability and stiffness of the blends. More importantly, incorporating a small amount of organoclay into PLA enhanced its compatibility with TPS, as depicted in morphological studies. The enhanced crystallization and compatibilization of the blends resulted in enhanced mechanical properties of eco‐friendly composite materials for sustainable packaging applications.