Both tensile and tear strength values of PLAxEGMCy blown-film specimens in machine and transverse directions improve significantly and reach the maximum values as their EGMC contents approach an optimum value of 6 wt%. The melt shear viscosity values of PLAxEGMCy resins measured at varying shear rates are significantly higher than those of the PLA resin and increase consistently with their EGMC contents. FT-IR analysis suggest that the carboxylic acid groups of PLA molecules react with the epoxy groups of EGMC molecules during the reactive-extrusion processes of PLAxEGMCy specimens. Further DMA and morphological analysis of PLAxEGMCy specimens reveal that EGMC molecules are phase-separated with PLA molecules at EGMC contents equal to or more than 2 wt%, since distinguished phase-separated EGMC droplets and tanδ transitions were found on fracture surfaces and tanδ curves of PLAxEGMCy specimens, respectively. Possible reasons accounting for the above interesting properties of the PLA/EGMC specimens are proposed in this study.