A novel form-stable composite as phase change material (PCM) for thermal energy storage was prepared by absorbing stearic acid (SA) into halloysite nanotube (HNT). The composite PCM was characterized by TEM, FT-IR and DSC analysis techniques. The composite can contain SA as high as 60 wt% and maintain its original shape perfectly without any SA leakage after subjected to 50 melt–freeze cycles. The melting temperature and latent heat of composite (SA/HNT: 60/40 wt%) were determined as 53.46°C and 93.97 J g−1 by DSC. Graphite was added into the SA/HNT composite to improve thermal storage performance, and the melting time and freezing time of the composite were reduced by 65.3 and 63.9%, respectively. Because of its high adsorption capacity of SA, high heat storage capacity, good thermal stability, low cost and simple preparation method, the composite can be considered as cost-effective latent heat storage material for practical application. Copyright © 2011 John Wiley & Sons, Ltd.