In this study, the properties of polyethylene-octene elastomer/chitosan (POE/chitosan) and acrylic acid (AA)-grafted-polyethylene-octene elastomer/chitosan (POE-g-AA/chitosan) were examined using various characterizing instruments. Mechanical and thermal properties of POE deteriorated noticeably when it was blended with chitosan, due to the unsatisfactory compatibility between the two phases. The greater compatibility of POE-g-AA with chitosan, due to the formation of ester carbonyl and imide groups, led to a much better dispersion and homogeneity of chitosan in the POE-g-AA matrix and consequently to noticeably better mechanical properties. Furthermore, with a lower melting point temperature, the POE-g-AA/chitosan blend was more easily processed than POE/chitosan. POE-g-AA/chitosan had a higher water resistance than POE/chitosan. Both blends suffered weight loss when buried in soil, especially at high levels of chitosan substitution, indicating that both were biodegradable. The mechanical properties of both blends, such as tensile strength and elongation at break, also deteriorated after being buried in soil. (C) 2003 Wiley Periodicals, Inc.