Poly(ethylene octene) grafted with glycidyl methacrylate (POE-g-GMA) was prepared and used to toughen poly (lactic acid) (PLA) via reactive blending. It was found that the notched Izod impact strength of PLA/POE-g-GMA blends improved dramatically when the content of elastomer was higher than 10 wt%. Reactive compatibilization between PLA and POE-g-GMA were studied by Fourier transform infrared spectroscopy (FTIR) and Molau test, the results showed the end carboxyl groups of PLA reacted with the epoxide groups of POE-g-GMA during blending. This considerably improved the compatibilization, leading to better wetting of the dispersed phase by the PLA matrix and finer dispersed POE-g-GMA particles with narrow distribution. Moreover, the critical interparticle distance (Lc) of the dispersed domains for PLA/POE-g-GMA blends system at room temperature was also identified. POLYM. ENG. SCI., 2013. (c) 2012 Society of Plastics Engineers