In this work, a strategy was used to combine Mg(OH)₂ nanoparticles (MDH), the bentonite nano-sheets, and melamine cyanurate (MC) to prepare dioctyl phthalate (DOP) plasticized polyvinyl chloride (PVC) nanocomposites with increased thermal stability, Limiting Oxygen Index (LOI), and tensile strength as well as reduced total heat release. To prepare MC-modified Mg(OH)₂@bentonite nanohybrid (MMHB), MDH was installed on the calcined bentonite and consequently modified with MC. The nanocomposite thin films were prepared from plasticized-PVC and MMHB using the solvent casting method. It was found that the combination of MDH and the bentonite nano-sheets in the presence of MC could improve the PVC properties. Thermogravimetric analysis (TGA) in both N₂ and air atmospheres, indicated that the thermal stability of PVC was enhanced via adding MMHB, which was evident by the increased thermal decomposition temperature. The microscale combustion calorimetry (MCC) results of the PVC nanocomposites with 5% and 8% by mass of MMHB revealed that an optimal isolating layer is formed, which increased flame retardant properties. The PVC matrix nanocomposite containing 8% by mass of MMHB with LOI value of 33.4% exhibited high flame retardancy. Moreover, the tensile strength and elastic modulus of the sample containing 5% by mass of MMHB increased by 65.5% and 55.2% compared to those of pristine PVC, respectively. Highlights: A nanohybrid was prepared from Mg(OH)₂ (MDH) and calcined bentonite. Preparation of melamine cyanurate (MC). Preparation of MC-modified MDH@bentonite nanohybrid (MMHB). Effects of MMHB on thermal stability and flame retardancy of plasticized PVC. The efficient flame retardancy effect of the additive on plasticized PVC.