Biocomposites of a biopolymer and the coproduct of corn bioethanol industry, dried distillers' grains with solubles (DDGS), were produced by reactive melt extrusion and injection molding. The biopolymer matrix was a blend of polyhydroxy(butyrate-co-valrerate), PHBV, and poly(butylene adipate-co-terphthalate), PBAT. The effect of compatibilizer, polymeric methylene diphenyl diisocyanate (PMDI), and corn oil lubricant was studied. The change in melt processing force suggested the occurrence of chemical reactions during the processing. This hypothesis was further investigated by infrared spectroscopy by which the formation of urethane and urea bonds between DDGS and polymeric matrix was approved. Dynamic mechanical analysis confirmed the occurrence of crosslinks at PBAT-PHBV interface showing that the tan delta curves for PBAT and PHBV of the matrix shifted slightly towards each other. Moreover, the calculated parameter of interaction, A, from tan delta curves admitted the stronger bond at the DDGS-matrix interface as a result of addition of PMDI compatibilizer. Also, scanning electron microscopy images revealed improved interfacial adhesion at the DDGS-matrix interface as well as PBAT-PHBV interface within the matrix itself. The obtained crosslinked interfaces resulted in improvement in the strength, modulus, and elongation-at-break of biocomposites. Moreover, a synergism of PMDI and corn oil effects led to a dramatic improvement in impact strength of this biocomposite system so that the respective value for the prepared DDGS biocomposite increased from 75 to 212 J/m with addition of 1 % of PMDI and 3 % of corn oil.