Due to the challenges of the cost of nanocellulose materials and the dispersion of them in polymer matrix, small amount and well-dispersed nanocellulose materials are desired as reinforcement to achieve environmentally-friendly nanocomposites with high performance. In this study, an aligned polylactic acid (PLA) based nanocomposite reinforced by 0.1 wt% of functionalized cellulose nanofibers (CNFs) was investigated. The CNFs were covalently grafted by polyethylene glycol (PEG), which improves the dispersion of the CNFs in the PLA significantly compared to the native CNFs. The improved dispersion was examined by scanning electron microscopy (SEM), polarized optical microscopy (POM) and mechanical testing. Furthermore, it was found that the alignment can improve mechanical properties of the nanocomposite dramatically. The strength of the aligned nanocomposite reaches 343 MPa with a draw ratio of 8, meanwhile the toughness is about 30 times enhanced compared to the isotropic material. The aligned nanocomposite also exhibits light scattering behavior, indicating that it has the potential to be used in optical applications.