This work presented the influence of thermoplastic poly(ether‐ester) elastomer (TPEE) and bentonite (BTN) on improving the mechanical and thermal properties of poly(lactic acid) (PLA). PLA was initially melt mixed with TPEE at six different loadings (5–30 wt%) on a twin screw extruder and then injection molded. The mechanical tests revealed an increasing impact strength and elongation at break with increasing TPEE loading, but a diminishing Young's modulus and tensile strength with respect to pure PLA. The blend at 30 wt% TPEE provided the optimum improvement in toughness, exhibiting an increase in the impact strength and elongation at break by 3.21‐ and 10.62‐fold over those of the pure PLA, respectively. Scanning electron microscopy analysis illustrated a ductile fractured surface of the blends with the small dispersed TPEE domains in PLA matrix, indicating their immiscibility. The 70/30 (wt/wt) PLA/TPEE blend was subsequently filled with three loadings of BTN (1, 3, and 5 parts by weight per hundred of blend resin [phr]), where the impact strength, Young's modulus, tensile strength and thermal stability of all the blends were improved, while the elongation at break was deteriorated. Among the three nanocomposites, that with 1 phr BTN formed exfoliated structure and so exhibited the highest impact strength, elongation at break, and tensile strength compared to the other intercalated nanocomposites. Moreover, the addition of BTN was found to increase the thermal stability of the neat PLA/TPEE blend due to the barrier properties and high thermal stability of BTN.