Novel thermoplastic starch (TPS)-clay nanocomposite foams were prepared by melt-processing. The use of urea as plasticizer avoids the cracking of TPS during storage and enhances the dispersion of ammonium-treated clay in TPS. X-ray diffraction shows an increase in the basal plane spacings of both natural and treated clays, suggesting formation of nanocomposites. Scanning electron microscopy shows spontaneously formed regular foam structures with 84% porosity in TPS-ammonium-treated clay. This does not form in TPS or TPS-natural clay nanocomposites. This result implies that the regular foam formation is due to the ammonium surfactant of clay, which produces ammonia gas acting as an internal blowing agent. Thermogravimetric analysis confirms this deduction.