The quest for sustainable and high-performance fibre reinforced polymer composite materials enhanced with compatibilisers has garnered significant attention for structural applications such as railway sleepers. This study explores the effects of nanoclay incorporation on the physio-chemical, mechanical, thermal, and morphological properties of hybrid polyamide biocomposites reinforced with treated kenaf and glass fibres. Aimed at addressing the limitations of natural fibre composites in terms of dimensional stability and moisture resistance, and mechanical robustness. hybrid composites were fabricated using varying contents of nanoclay (0–5 wt%) and fibre compositions (20–50 wt.%). Standardized tests including ASTM-based mechanical evaluations, thermogravimetric analysis (TGA), Fourier-transform infrared spectroscopy (FTIR), and scanning electron microscopy (SEM) were employed. The optimal formulation (E3-2) containing 30% hybrid fibre and 3% nanoclay exhibited superior performance, achieving a flexural strength of 85.9 MPa, impact toughness of 35.30 kJ/m2, tensile modulus of 6.9 GPa, and water absorption of just 3.42%, thereby surpassing ISO 12856–1 and FFU standards. Nanoclay at 3 wt% was found to significantly enhance thermal stability and interfacial bonding while minimising moisture uptake. However, higher nanoclay concentrations led to particle agglomeration and compromised mechanical integrity. Well dispersed fibres and effective stress transfer mechanisms revealed by SEM analysis, validating the synergy between nanoclay and hybrid fibres. The study concludes that moderate nanoclay loading, especially at 3wt.%, exhibited an optimal balance between performance and processing, making such composites viable for structural applications. It is recommended that future research further optimise fibre treatments and explore long-term durability for broader engineering deployment.