In this study, the compatibilizing effect of organically modified clay in poly(lactic acid) and natural rubber blends was investigated. In order to improve poor toughness of semi-crystalline PLA, natural rubber which is highly elastic and amorphous polymeric material was introduced. However, those two polymers are immiscible, and their blend showed apparent phase separation with poor toughness. To get over this problem, the organically modified clay was introduced as a compatibilizer for the immiscible PLA and natural rubber blend. It showed that the averaged droplet size of the dispersed natural rubber in PLA domain in the compatibilized system was significantly decreased leading to micro-phase separation as evidenced by TEM images. Rheological measurements were conducted to explain the structural development of the blend system. In dynamic frequency sweep test, the storage modulus of the blend was rarely increased even after 5~15wt% of natural rubber was added to PLA and the toughness of the blend was not changed either. On the other hand, the modulus of PLA/natural rubber blend after a small amount of organoclay addition increased over to that of PLA. The toughness of the compatibilized blend was also increased and it also showed enhanced creep resistance and creep recoverability. These results imply that these two immiscible polymers were compatibilized by added organoclays. The compatibilizing efficiency was examined by changing processing conditions and material composition. The compatibilizing effect was pronounced with higher processing rpm and weight fraction of organoclays. The results were explained by droplet breakup and coalescence mechanism of polymer blends. The compatibilizing efficiency was also varied with the types of clays used, and the Hansen solubility parameter was introduced to explain the different efficiency and the selective location of organoclay in polymer blends.