The aim of this study was development a composite film based on sago starch and κ-carrageenan to find a gelatin alternative in the pharmaceutical capsules processing. Hydrolyzed-Hydroxypropylated (dually modified) sago starch was mixed with κ-carrageenan (0.25, 0.5, 0.75, and 1%). The drying kinetics, thermomechanical, physicochemical, and barrier properties of composite films were estimated and compared with bovine gelatin. Results show that drying kinetics and mechanical properties of the composite films were comparable to those of gelatin. The water vapor permeability and moisture content of the composite films were lower than those of gelatin. The solubility of the composite films was higher than that of gelatin, and the composite films were more stable at higher relative humidity than were the gelatin films. These results show that dually modified sago starch in combination with κ-carrageenan has properties similar to those of gelatin, thus proposed system can be used in pharmaceutical capsules processes.