Composite films were formed by incorporating three different bentonites into an ethylene modified, water‐soluble poly(vinyl alcohol), EPVOH. The interaction of EPVOH with both hydrophilic and hydrophobic bentonites was investigated. EPVOH provided lower water vapor and oxygen transmission rates compared to a conventional PVOH grade when exposed at high relative humidities (70–90% RH). EPVOH films which exhibited oxygen barrier properties comparable to that of a biaxially oriented PET packaging film at 80% RH were produced. High compatibility between EPVOH and hydrophilic bentonites provided an even distribution of clay platelets in the composites. A strong increase in Young's modulus with increased addition of any of the three bentonites was found. At low addition levels the hydrophobic bentonite proved to be effective in terms of maintaining high elongation at break, high transparency and high gloss. © 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2015, 132, 41737.