Polylactide (PLA) was melt blended with poly(butylene carbonate) (PBC) in an effort to improve the toughness of the PLA without compromising its biodegradability and biocompatibility. The miscibility, morphology, thermal behavior, and mechanical properties of the blends were investigated. The blend was an immiscible two-phase system with PBC uniformly dispersed within the PLA matrix. Because of the interfacial function, the incorporation of PBC accelerated the crystallization rate of PLA. By the incorporation of PBC, a polylatide-based material with high stiffness and toughness was achieved. Even at 10% of PBC, high elongation at break of 139% was obtained, while the tensile strength remained as high as 50.7 MPa. The Pukanszky model gave credit to modest interfacial adhesion between PLA and PBC although PLA/PBC is an immscible blend. The plastic deformation, occurring via debonding process, is an important energy-dissipation process and leads to a toughened, biodegradable polymer blend. The important point is that the toughening mechanism requires only modest level of adhesion between particles and the polymer. The molecular mobility is a crucial factor for yield stress and plastic flow. (C) 2012 Wiley Periodicals, Inc. J. Appl. Polym. Sci., 2012