Microcellular injection molding using supercritical fluid (SCF) as a physical blowing agent is capable of producing lightweight, dimensionally stable plastic parts while using less material. To improve strength and foamability of the biodegradable poly(butylenes adipate-co-terephthalate) (PBAT), poly(vinyl alcohol) (PVA) was used to compound the biodegradable PBAT/PVA blends. It was found that the tensile mechanical properties (i.e., the Young's modulus and ultimate strength) of both the solid and microcellular injection molded PBAT/PVA parts increase with increasing PVA content and the enhancement depends on their blend composition, morphology, and microstructure. As the PVA weight ratio increases, the PVA domains in the solid parts change from tiny, dispersed droplets to elongated filaments, to a cocontinuous structure, and finally to a continuous phase after phase inversion. The evolving microstructure and molecular entanglement result in various rheological melt characteristics and changes in complex viscosity. For foamed parts, the fractured surface of the microcellular injection molded parts present a multilayer structure and the PVA domains help to increase the cell densities as well as the tensile properties. The results provide useful insights into foaming PBAT/PVA blends with tunable microstructures and tensile mechanical properties.