This study develops bagasse fiber (BGSEF) reinforced chemically functionalized polystyrene (CF-PS) composites (BGSEF/CF-PS) using CF-PS as a matrix, that has higher amount of functionality and requires processing upto 210°C. BGSEF/CF-PS have been processed by extrusion and injection moulding, retaining the stability of the thermally sensitive BGSEF. Relative to the CF-PS, all the BGSEF/CF-PS composite compositions show higher tensile and flexural properties, that increase with increasingly higher amounts of BGSEF in them. Relative to the CF-PS, the 10/90, 20/80 and 30/70 BGSEF/CF-PS composites show approx. 9.5%, 45% and 63% higher tensile strength, approx. 19%, 31% and 45% higher tensile modulus and approx. 20.5%, 22%, and 23% lower tensile elongation at break respectively, and show approx. 5%, 10%, and 16% higher flexural strength respectively, and approx. 6.5%, 16%, and 24% higher flexural modulus respectively. Upon water absorption saturation, the tensile and flexural properties of the wet composites decrease, relative to the dry composites. Adhesion between BGSEF and CF-PS in the composites, results from ester bonds and hydrogen bonds. The composites are thermally stable upto 290°C. These BGSEF/CF-PS composites by Palsule process show better performance than the BGSEF/PS composites by fiber treatment process.