In this study, cellulose nanofibrils (CNFs) were modified by catalyzed lactic acid esterification in an aqueous medium with SnCl₂ as a catalyst. Films were made from unmodified and lactic acid-modified CNF without a polymer matrix to evaluate the effectiveness of the modification. Ungrafted and lactic acid-grafted CNF was also compounded with poly(lactic acid) (PLA) to produce composites. Mechanical, water absorption, and barrier properties were evaluated for ungrafted CNF, lactic acid-grafted CNF films, and PLA/CNF composites to ascertain the effect of lactic acid modification on the properties of the films and nanocomposites. FTIR spectra of the modified CNF revealed the presence of carbonyl peaks at 1720 cm⁻¹, suggesting that the esterification reaction was successful. Modification of CNF with LA improved the tensile modulus of the produced films but the tensile strength and elongation decreased. Additionally, films made from modified CNF had lower water absorption, as well as water vapor and oxygen permeability, relative to their counterparts with unmodified CNFs. The mechanical properties of PLA/CNF composites made from lactic acid-grafted CNFs did not significantly change with respect to the ungrafted CNF. However, the addition of lactic acid-grafted CNF to PLA improved the water vapor permeability relative to composites containing ungrafted CNF. Therefore, the esterification of CNFs in an aqueous medium may provide an environmentally benign way of modifying the surface chemistry of CNFs to improve the barrier properties of CNF films and PLA/CNF composites.