Flexible poly(vinyl chloride) (PVC) was fabricated using a palm oil-based alkyd as a co-plasticizer to di-octyl phthalate (DOP) and di-isononyl phthalate (DiNP). The effects of the incorporation of the palm oil-based alkyd on morphological, thermal and mechanical properties of PVC compounds were studied. Results showed the incorporation of the alkyd enhanced the mechanical and thermal properties of the PVC compounds. Fourier transform infrared spectroscopy (FTIR) results showed that the polar -OH and -C=O groups of alkyd have good interaction with the -C-Cl group in PVC via polar interaction. The morphological results showed good incorporation of the plasticizers with PVC. Improved tensile strength, elastic modulus, and elongation at break were observed with increasing amount of the alkyd, presumably due to chain entanglement of the alkyd with the PVC molecules. Thermogravimetric analysis results confirmed that the alkyd has improved the thermostability of the PVC compounds.