In this study, two types of biobased epoxy composites were prepared by using only alkali-treated cotton waste (CtW), or with the nanoclay (NC) in the form of hybrid reinforcement. Phenol novolac-type epoxy resin (EPN) was used as a matrix. Untreated (CtW) and alkali-treated (NaOH-CtW) particles were characterized by scanning electron microscopy (SEM)/energy-dispersive X-ray spectroscopy (EDX). The average size for NC was determined as 3838 nm. Composites were prepared at 10–50 wt% NaOH-CtW and 20 wt% NaOH-CtW/(1–2–3–4–5) wt% NC ratios. The morphology of the composites was investigated using SEM. The composites' properties were determined by applying thermogravimetric analysis (TGA), and various tests (tensile, hardness, water sorption, and surface contact angle measurement). The tensile strength of pure EPN was 96.6 MPa, while it changed in the range of 74–98 and 81–106 MPa for NaOH-CtW and hybrid composites, respectively. All hybrid composites exhibited higher Young's modulus values (7.7–8.9 GPa). Thermal values of hybrid composites were found higher and their char percentages varied in the range of 28.9–30.3%. NaOH-CtW increased the water sorption of the epoxy matrix from 0.59% up to 6% by 50 wt%. In contrast, a decrease in water sorption of NC composites was observed.