A cooperative flame-retardant system based on natural intumescent-grafted bamboo charcoal (BC) and chitosan (CS) was developed for polylactic acid (PLA) with improved flame retardancy and minimal decline in strength properties. Chitosan (CS) as an adhesion promoter improved the interfacial compatibility between graft-modified bamboo charcoal (BC-m) and PLA leading to enhanced tensile properties by 11.11% and 8.42%, respectively for tensile strength and modulus. At 3 wt.% CS and 30 wt.% BC-m, the crystallinity of the composite increased to 38.92%, or 43 times that of pure PLA (0.9%). CS promotes the reorganization of the internal crystal structure. Thermogravimetric analysis showed significantly improved material retention of PLA composites in nitrogen and air atmosphere. Residue rate for 5 wt.% CS and 30 wt.% BC-m was 29.42% which is 55.1% higher than the theoretical value of 18.97%. Flammability tests (limiting oxygen index-LOI and UL-94) indicated significantly improved flame retardancy and evidence of cooperation between CS and BC-m, with calculated cooperative effectiveness index(Ce) >1. From CONE tests, the peak heat release rate (pHRR) and total heat release (THR) were reduced by 26.9% and 30.5%, respectively, for 3% CS + 20% BC-m in PLA compared with adding 20% BC-m alone. Analysis of carbon residue morphology, chemical elements and structure suggest CS and BC-m form a more stable char containing pyrophosphate. This char provides heat insulation to inhibit complete polymer pyrolysis, resulting in improved flame retardancy of PLA composites. Optimal mix may be recommended at 20% BC-m + 3% CS to balance compatibility, composite strength properties and flame retardance.