In this paper, flame retardancy and thermal insulating properties of sepiolite clay and cellulose nanofibers based aerogel has been discussed. Due to the fragile characteristic of sepiolite based aerogel, cellulose nanofiber has been introduced into the clay to make it a composite aerogel. The prepared hybrid aerogel has been modified with a hydrophobic precursor i.e. Methyltrimethoxysilane (MTMS). Formation of aerogel has been confirmed by Field emission scanning electron microscope (FESEM) analysis and Brunauer–Emmett–Teller (BET) surface area measurement. The prepared specimens have shown the typical properties of aerogels like low density (11.5 kg/m3 to 32.5 kg/m3), high porosity (99.2–98.3%) with good dimensional stability. Vertical burning test along with V-0 performance, horizontal burning test and flame penetration has confirmed its thermal shielding and flame retardancy. Thermal conductivity results also show good thermal insulation properties of prepared composite aerogel.