Utilization of TEMPO-oxidized celluloses in bio-based nanocomposites is reported for the first time. TEMPO-oxidized wood pulps (net carboxylate content 1.1 mmol/g cellulose) were fibrillated to varying degrees using a high intensity ultrasonic processor. The degree of fibrillation was controlled by varying sonication time from 1 to 20 min. The sonication products were then characterized independently and as fillers (5 wt% loading) in hydroxypropyl cellulose nanocomposite films. Nanofibril yields ranging from 11 to 98 wt% (on fiber weight basis) were obtained over the range of sonication times used. Suspension viscosities increased initially with sonication time, peaked with gel-like behavior at 10 min of sonication and then decreased with further sonication. The thermal degradation temperature of unfibrillated oxidized pulps was only minimally affected (6 °C decrease) by the fibrillation process. Dynamic mechanical analysis of the nanocomposites revealed strong fibril-matrix interactions as evidenced by remarkable storage modulus retention at high temperatures and a suppression of matrix glass transition at “high” (~5 wt%) nanofibril loadings. Creep properties likewise exhibited significant (order of magnitude) suppression of matrix flow at high temperatures. It was also believed, based on morphologies of freeze-fracture surfaces that the nanocomposites may be characterized by high fracture toughness. Direct fracture testing will however be necessary to verify this suspicion.