Melt blending of polylactic acid (PLA) and a chain-extended polyethylene glycol (CE-PEG) have been performed in an effort to toughen the PLA without significant loss of modulus and ultimate tensile strength. The chain-extended PEG was prepared with melt condensation of a low molecular weight PEG and 4,4'-methylenebis(phenylisocyanate) (MDI) for enhancement of the molecular weight of PEG. The thermal and mechanical properties, miscibility and phase morphologies of blends were investigated. By using thermal and fracture surface analysis, the blends were found to be a partially miscible system with shifted glass transition temperatures. The addition of CE-PEG leads to slight decrease in tensile strength and modulus, while the elongation at break is characterized by an important increase (540%), compared with neat PLA and PLA/PEG (low molecular weight PEG, M(n) = 35,000). The relative ductility of PLA/CE-PEG is 40 times higher than that of neat PLA. The brittle fracture of neat PLA was transformed into a ductile fracture by the addition of CE-PEG. (C) 2011 Wiley Periodicals, Inc. J Appl Polym Sci 123: 2360-2367, 2012