Poly(lactic acid) (PLA) and poly(propylene carbonate) (PPC) blends with different levels of chain extender were prepared and cast into films. The effect of chain extender on the mechanical, thermal and barrier properties of the films were investigated. With the inclusion of the chain extender, the compatibility and interfacial adhesion between the two polymer phases were significantly improved by a mean of forming a PLA-chain extender-PPC copolymer. Reactions between the chain extender, PLA and PPC were observed through FTIR study. SEM study also confirmed the improved compatibility and interfacial adhesion. The elongation at break of the compatibilized film with optimal amount of chain extender showed dramatic increase by up to 1940 %. DSC studies revealed that chain extender hindered the crystallization of the film which explained the decrease in both water and oxygen barrier when adding chain extender. PLA was found to be able to enhance both oxygen and water barrier of the blend as compared to neat PPC, while in the case of the blend with chain extender, oxygen and water barrier properties exhibited reduction at the beginning. However, when increasing chain extender concentration, these two barrier performance exhibited an upward trend. It was found that PLA/PPC blend showed much better oxygen barrier property than both parent polymers, which can be ascribed to the acceleration effect of PPC on the crystallization of PLA.