The present study explores the effect of a magnetically modified halloysite (mHNT) surface on the structure and properties of biodegradable polymer nanocomposites based on poly ɛ-caprolactone (PCL). Halloysite nanotubes (HNTs) have been modified by a scalable and tunable procedure using magnetic Fe oxide particles prepared by microwave-assisted synthesis from ferrous sulfate at high pH. The HNT content in composites prepared in melt varied from 5 to 30 wt.%. Application of magnetically modified HNT to PCL resulted in the formation of soft magnetic materials. Analyses of the nanocomposite structure revealed that both natural and magnetized HNTs, as well as free magnetite particles are dispersed uniformly in the polymer matrix. Investigation of the mechanical and physical properties confirmed that the reinforcing ability of HNTs was not affected by magnetic modification.