Glycidyl methacrylate (GMA) functionalized polyolefin elastomers (POE) (POE-g-GMA), which was a reactive processing agent, was melt-blended with poly(lactic acid) (PLA) and poly(propylene carbonate) (PPC) by twin-screw extrusion. The mechanical property results showed that with the addition of POE-g-GMA, the elongation at break and impact toughness of PLA/PPC blends increased while the tensile strength decreased. Dynamic thermomechanical analysis (DMA) and scanning electron microscope (SEM) results indicated that PLA/POE-g-GMA/PPC blends were partly miscible and the addition of POE-g-GMA improved the compatibility of blends. The higher T-cs and lower T-ms of PLA/POE-g-GMA/PPC blends showed a depressed crystalline ability of PLA caused by the decreased chain mobility according to the differential scanning calorimetry results and the thermal stability of PLA/POE-g-GMA/PPC blends was enhanced. Rheological results revealed that the addition of POE-g-GMA made the storage modulus (G'), loss modulus (G '') and complex viscosity of the blends increase, the melt strength also improved. These findings contributed to the biodegradable materials application for designing and manufacturing PLA film.