Biobased nanocomposites based on cellulose nanowhiskers (CNWs) and cellulose acetate butyrate (CAB) were prepared using solvent exchange of CNWs to ethanol by sol-gel method followed by casting. The strong flow birefringence of the solutions indicated evenly dispersed cellulose nanowhiskers in the dissolved polymer CAB. Scanning electron microscopy of the nanocomposites confirmed well dispersed CNWs in the CAB matrix, which was further supported by the high transparency exhibited by the nanocomposites. The results of tensile tests indicated significant improvements in the mechanical properties of nanocomposites by increasing the CNWs contents. The Young’s modulus and strength increased 83% and 70%, respectively, for nanocomposites with 12 wt% of CNW, and the strain was not suppressed compared to the neat CAB. The dynamic mechanical thermal analysis demonstrated significant improvement in storage modulus with increasing CNW contents, and the tan δ peak position was moved towards higher temperature when CNW was added. It is expected that solvent exchange by the sol-gel route followed by casting of nanocomposites from the same solvent will provide a promising route for obtaining cellulose nanocomposites with well dispersed CNW, leading to improved mechanical properties, even with low nanowhisker contents.