This paper describes our research on statistical language modeling of Lithuanian. The idea of improving sparse n‐gram models of highly inflected Lithuanian language by interpolating them with complex n‐gram models based on word clustering and morphological word decomposition was investigated. Words, word base forms and part‐of‐speech tags were clustered into 50 to 5000 automatically generated classes. Multiple 3‐gram and 4‐gram class‐based language models were built and evaluated on Lithuanian text corpus, which contained 85 million words. Class‐based models linearly interpolated with the 3‐gram model led up to a 13% reduction in the perplexity compared with the baseline 3‐gram model. Morphological models decreased out‐of‐vocabulary word rate from 1.5% to 1.02%.