levels of 1, 3, 5 wt%, spruce sawdust at levels of 40, 50, 60 wt% and electron beam irradiation dose at levels of 0, 30, 60 kGy were analyzed. Taguchi’s statistical method was employed in the design of experiments. According to Taguchi’s L9 orthogonal array, nine compounds employing a melt blending two-step process in a laboratory twin screw extruder were built. While tensile and flexural test specimens were prepared by using injection molding method, water absorption test specimens were provided by compression molding process. At 95% confidence level, the findings revealed that the nanoclay cloisite 10A had acted as a reinforcing agent and increasing nanoclay from 2.5 to 5 wt% had improved the tensile and flexural strengths and moduli and reduced water diffusion coefficient but also reduced toughness (the area under stress-strain plot in tensile test). However, at 7.5 wt%, the reinforcing effect of nanoclay is reduced probably due to agglomeration of nanoclay and increasing the ratio of intercalated structure to exfoliated structure. At 7.5 wt% nanoclay, the toughness was increased 31% compared with 5 wt% nanoclay. The results also indicated that at 5 wt% of the coupling agent MAPE compared with 3 wt%, the properties had been either lowered or remained approximately unchanged. It was also found that a rise in the weight percentage of sawdust markedly increased the tensile and flexural properties but also increased water diffusion coefficient and reduced toughness intensely. Increasing electron beam irradiation dose to 60 kGy, improved the tensile and flexural properties and influenced water diffusion coefficient positively. By irradiating the composite at level of 30 kGy, the tensile modulus decreased 14.6% but by increasing the dose of electron beam irradiation to 60 kGy the composite recovered its modulus. At 95% confidence level, polyethylene grafted with maleic anhydride and electron beam irradiation didn’t have a significant effect on toughness. With increasing nanoclay Cloisite 10A weight percentage and increasing electron beam irradiation dose, the water absorption percent after 24 hour was increased while water diffusion coefficient was reduced. Finally, X-ray diffraction (XRD) data reflected that intercalated and semi-exfoliated structures were developed in the fabricated samples under study. The micrographs of scanning electron microscopy (SEM) confirmed a suitable coherence existing between lignocellulosic filler phase and low density polyethylene matrix. The optimum point for all responses was obtained at 7.5 wt% for nanoclay cloisite 10A, 5 wt% for polyethylene grafted with maleic anhydride (MAPE), 50 wt% for spruce sawdust and 60 kGy for electron beam irradiation dose respectively. keywords : wood plastic composite, mechanical properties, electron beam irradiation, nanoclay, water diffusion coefficient