The inherent shortcomings of polylactide (PLA) including brittleness, low glass transition temperature, and melt strength during processing were addressed through a facile melt blending of PLA with polybutadiene-g-poly(styreneco-acrylonitrile) (PB-g-SAN) core-shell impact modifier and poly(methyl methacrylate) (PMMA). Highly tough PLA-based ternary blends with drastically enhanced glass transition temperature (approximate to 21 degrees C) and melt strength were successfully prepared. The effect of PMMA content (ranging from 0 to 30 wt %) on the phase miscibility, morphology, mechanical properties, thermal behavior, rheological properties, and toughening mechanisms of PLA/PB-g-SAN/PMMA blends with 30% PB-g-SAN was systematically investigated. It was found that PMMA can effectively tune the interfacial interactions, phase morphology and performance of incompatible PLA/PB-g-SAN blend owing to its partial miscibility with PLA matrix and miscibility with SAN shell of PB-g-SAN, as evidenced by DMTA analysis. Increase in PMMA content promoted the phase adhesion and dispersion state of PB-g-SAN terpolymer in the blends and highly toughened blends were achieved which showed incomplete break of impact specimen. The significant effect of phase morphology on imparting tremendous improvement in impact toughness was clarified. The maximum impact strength (about 500 J/m), elongation-at-break and glass transition were obtained for ternary blend with 25% PMMA. The PLA crystallinity was gradually suppressed in ternary blends upon progressive increase in PMMA content. Rheological studies showed solid-like behavior with enhanced viscosities for ternary blends. Micromechanical deformations and toughening mechanisms were studied by post-mortem fractography. Massive matrix shear yielding was found as the main source of energy dissipation triggered by suitable interfacial adhesion and microvoid formation.