AbstractWater based polylactic acid (PLA)‐surface modified montmorillonite (MMt) nanocomposites as biobased formulations for paper coating were successfully developed using emulsification solvent evaporation method. Electrostatic and steric stabilization mechanisms have contributed to the production of stable emulsions up to 5 months at 23 ± 1°C, revealing strong repulsive forces generated between the nanoparticles as confirmed by zeta potential (ζ) and dynamic light scattering (DLS) analysis. MMt particles were fully encapsulated by PLA as demonstrated by transmission electron microscopy (TEM) micrographs. Meanwhile the film formation process highlighted the importance of emulsifier's type and solubility in the polymer matrix, as no films were obtained when sodium oleate was used alone compared with continuous, homogeneous, and free‐standing films obtained when the combination Tween 80 (80 wt%)—sodium oleate (20 wt%) was used. Scanning electron microscopy (SEM) micrographs of the cross‐section's surfaces showed homogeneous dispersion of the MMt particles with no clusters or agglomerates formed. Thermal analyses using differential scanning calorimetry and thermogravimetric analysis (DSC‐TGA) showed an overall reduction in the glass transition temperature (Tg) and the thermal stability of neat PLA, whoever this reduction was recovered when MMt was added due to the confinement effect. Thickened PLA and PLA/MMt emulsions using 1 wt% xanthan gum showed a non‐Newtonian behavior and shear thinning flow with suitable viscosity values for paper coating applications.Highlights Development of stable PLA/organoclay nanocomposite aqueous dispersions. Steric and electrostatic mechanisms provided excellent stability. Full encapsulation of organoclay platelets in nanometric PLA particles. Formation of free‐standing films from PLA/organoclay emulsions. Thickened PLA/organoclay emulsions using Xanthan gum for paper coatings.