This study focuses on the development of advanced water-resistant bio-based membranes with enhanced vapour permeability for use within building envelopes. Building walls are vulnerable to moisture damage and mold growth due to water penetration, built-in moisture, and interstitial condensation. In this work, breathable composite membranes were prepared using micro-fibrillated cellulose fiber (CF) and polylactic acid (PLA). The chemical composition and physical structure of CF is responsible for its hydrophilic nature, which affects its compatibility with polymers and consequently its performance in the presence of excessive moisture conditions. To enhance the dispersibility of CF in the PLA polymer, the fibers were treated with an organic phosphoric acid ester-based surfactant. The hygroscopic properties of the PLA-CF composites were improved after surfactant treatment and the membranes were resistant to water yet permeable to vapor. Morphological examination of the surface showed better interfacial adhesion and enhanced dispersion of CF in the PLA matrix. Thermal analysis revealed that the surfactant treatment of CF enhanced the glass transition temperature and thermal stability of the composite samples. These bio-based membranes have immense potential as durable, eco-friendly, weather resistant barriers for the building industry as they can adapt to varying humidity conditions, thus allowing entrapped water vapor to pass through and escape the building, eventually prolonging the building life.