Nanofibers were isolated from rice straw pulp using ultrahigh friction grinding and high‐pressure homogenization. Chitosan nanocomposites were prepared using the isolated nanofibers at fiber loading from 2.5 to 20% by solution casting and evaporation technique. The effect of nanofiber loading on dry and wet tensile strength, dynamic mechanical thermal properties, and cyrstallinity of chitosan were studied using tensile testing, thermogravimetric analysis, dynamic mechanical thermal analysis, and X‐ray diffraction. Addition of rice straw nanofibers (RSNF) to chitosan resulted in significant improvement in wet and dry tensile strength, and shift of glass transition temperature (T g ) of chitosan matrix to higher values. Chitosan nanocomposites prepared using RSNF (CRSNF) had remarkable wet and dry tensile strength, which could be attributed to presence of both nanofibers and nanosilica particles originally present in rice straw fibers. Addition of RSNF to chitosan did not affect its onset thermal degradation temperature. © 2012 Wiley Periodicals, Inc. J Appl Polym Sci, 2012