A nucleating agent, benzyl‐hydrazide‐derivatized poly(lactic acid) (PLA) and γ‐cyclodextrin inclusion complex (PLA‐IC‐BH), was synthesized through a series of reactions. Poly(lactic acid) and γ‐cyclodextrin inclusion complex (PLA‐IC) was first obtained by ultrasonic co‐precipitation, which was then subjected to carboxylation, acylation, and amidation using benzoyl hydrazine and thionyl chloride. The composition and structure of PLA‐IC‐BH was confirmed by 1H nuclear magnetic resonance spectroscopy, Fourier transform infrared spectroscopy, and X‐ray diffraction. PLA/PLA‐IC‐BH composites were prepared by melt blending and a hot‐press forming process. Mechanical properties, thermal stabilities, and crystallization behaviors of PLA/PLA‐IC‐BH samples were investigated by thermogravimetric analysis, differential scanning calorimetry (DSC), polarized optical microscopy (POM), rheological analysis, and so on. Mechanical testing and thermogravimetric analysis showed that the tensile strengths, impact properties, and thermal stabilities of PLA/PLA‐IC‐BH composites were improved significantly compared to pure PLA and PLA/PLA‐IC. DSC results showed that crystallinity of PLA was increased from 5.17% to 38.93% after introduction of PLA‐IC‐BH. POM results showed that PLA‐IC‐BH acted as a nucleating agent for PLA and enhanced its crystallization rate. Rotational rheological behaviors of PLA/PLA‐IC‐BH demonstrated that incorporation of PLA‐IC‐BH increased the rigidity of the network structure of the PLA matrix. Compared to those of PLA, the maximum torque and apparent viscosity of PLA/PLA‐IC‐BH composites were increased by 55.56% and 25.59%, respectively. Copyright © 2017 John Wiley & Sons, Ltd.