This study focuses on the compatibilization of poly(lactic acid) (PLA)/thermoplastic polyurethane (TPU) blends by using 1,4 phenylene diisocyanate (PDI) for the first time, as the compatibilizer. Because of the potential interactions of diisocyanates with OH/COOH, they are useful for reactive processing of PLA/TPU blends in the melt processing. To have insight on the reactively compatibilized structure of PLA/TPU blends, phase morphologies are observed by means of scanning electron microscopy. The mechanical, thermal, and rheological responses of the blends are investigated. The observations are that the brittle behavior of PLA changes to ductile with the addition of TPUs. The addition of PDI improves the tensile properties of the blends. The compatibilization action of PDI is monitored with DMA and rheological experiments. Cross‐over in the G′ and G″ curves of compatibilized blends indicates the relaxation of branches formed in the presence of PDI. The dispersed phase size of TPU decreases in PLA in the presence of PDI due to the improved compatibility. © 2013 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 40251.