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Hydroxyazetidinium salts were used to surface-modify cellulose nanocrystals (CNC) by grafting the salts onto the sulphate ester groups on the CNC surfaces. The grafting was confirmed by ζ-potential measurements and by the thermal degradation behaviour of the modified CNC. The thermal stability (onset of degradation) of the CNC was improved by the surface modification (almost 100 °C). Composites containing surface-modified or unmodified CNC (0.1, 1.0 and 10 wt%) with an ethylene-based copolymer as matrix were produced by compression moulding. The thermal stability of the composites was not, however, markedly improved by the surface grafting onto the CNC. It is suggested that this is due to a degrafting mechanism, associated with the alkaline character of the system, taking place at high temperatures. Model experiments indicated, however, that this did not occur at the conditions under which the composites were produced. Furthermore, in the case of a reference based on pH-neutralised polymeric system and modified CNC, an upward shift in the onset of thermal degradation of the composite was observed. The addition of the CNC to the polymer matrix had a strong influence of the mechanical performance. For example, the tensile modulus increased approximately three times for some systems when adding 10 wt% CNC. The surface grafting of the hydroxyazetidinium salts appeared mainly to affect, in a positive sense, the yield behaviour and ductility of the composites. The results of the mechanical testing are discussed in terms of interactions between the grafted units and the matrix material and between the grafted groups.