A series of maleic anhydride grafted poly(lactic acid) (PLA-g-MAH) was prepared by mixing PLA, dicumyl peroxide (DCP) and maleic anhydride (MAH). Effects of DCP and MAH concentration on the grafting percentage were determined. PLA composites were prepared via melt mixing with halloysite clay (HNC; 3 wt%) and various amount of PLA-g-MAH (4–10 phr) using internal mixer followed by compression molding. Properties of the PLA composites were characterized using three-point bending flexural tests, scanning electron microscopy and differential scanning calorimetry. It was found that the grafting percentage of PLA-g-MAH was influenced by both DCP and MAH concentrations; however, DCP showed more profound effect. By the addition of PLA-g-MAH, the adhesion between PLA and HNC improved, which can be manifested by the enhancement in flexural properties. Degree of crystallinity of PLA/HNC increased significantly by the addition of PLA-g-MAH.