In this study, nanocomposites based on polyethylene (PE), maleic anhydride grafted polyethylene (MAPE), recycled newsprint fibers, and organically modified montmorillonite (nanoclay) were made by injection molding. The effects of two variable factors, namely, the nanoclay and MAPE contents, on the composite physical properties were examined. All blends were made with a fiber-to-PE weight ratio of 30 : 70. The results show that the addition of MAPE and nanoclay in the nanocomposite formulation significantly improved both the stability and water absorption properties. The improving effect of MAPE could be explained by the improvement in the quality of adhesion between the polymer and fibers. Nanocomposites containing 5 wt % MAPE and nanoclay exhibited minimum water absorption during the whole duration of immersion. The results of this research study show that wood plastic composites treated with a coupling agent and nanoclay will be desirable as building materials for outdoor applications. (C) 2010 Wiley Periodicals, Inc. J Appl Polym Sci 118: 3255-3259, 2010