Packaging film that possess antimicrobial activity is one of the ground-breaking concepts in food packaging. The main object of this work was to develop nontoxic nanocomposite films with good antimicrobial properties. Cellulose acetate (CA), polyethylene glycol (PEG) and cetyltrimethylammonium bromide (CTAB) modified montmorillonite (OMMT) were used to prepare the nanocomposite films. OMMT is characterized using X-ray diffraction (XRD) and Fourier transform infrared analysis. The films composed of 20 wt% PEG in a CA matrix (CP20) gave optimum results in terms of mechanical properties. OMMT (1, 3 and 5 wt%) was incorporated into the CP20 matrix to prepare the nanocomposites. XRD and transmission electron microscopy analysis showed that the nanocomposites are intercalated in nature. 3 wt% OMMT loaded nanocomposite gave the best results in terms of mechanical and barrier properties. The storage modulus and thermal stability of the nanocomposites increase with the increasing concentration of OMMT from 1-5 wt%. Optical clarity of the nanocomposites is not much affected in the visible region with different loadings of OMMT. These nanocomposites possess good antimicrobial activity as well as showing no toxicity towards human blood, so can be used as active packaging material. © 2016 The Royal Society of Chemistry.