Eco-friendly blends of polylactic acid (PLA)/ polyhydroxybutyrate (PHB) have been developed with the use of a sustainable plasticizer, namely epoxidized soybean oil methyl ester (ESOME). While PLA, PHB, and their blends are highly valued for their bio-origin and compostability at the end of their lifecycle, enhancing their flexibility for improved processability and broadening of their range of applications is an ongoing challenge. For this reason, we present the formulation of PLA/PHB blends with varying ESOME concentrations, processed by extrusion and compression molding. The structural, chemical, rheological, morphological and thermal properties of the PLA/PHB blends with and without ESOME are thoroughly investigated through a range of complementary techniques. The addition of ESOME causes a remarkable increase in flexibility and overall mechanical performance of PLA/PHB blends, as well as a significant enhancement of their oxygen barrier properties. Migration analysis to a dry food simulant reveals that it is well below the acceptable limit, for the blends with up to 7.5% wt % of ESOME. Based on the ranking of all the prepared PLA/PHB/ESOME blends with respect to their performance using the TOPSIS (Technique for Order Performance by Similarity to Ideal Solution) analysis, the PLA/PHB/7.5 wt % ESOME was found to be the most prominent of the produced blends for food packaging applications. The effective integration of ESOME and the significant improvement of the PLA/PHB properties pave the way for their adoption in the food packaging sector, aligning with sustainability goals and environmentally conscious future.