The thermal mechanical properties and morphological changes of modified poly(lactic acid) (PLA) and polycarbonate (PC) polymer blends based on the equal weight fraction of each component were investigated. Several blend samples were prepared by melt processing with a twin screw extruder using both poly(butylene succinate‐co‐lactate) (PBSL) and epoxy (EP) as compatibilizers for the PLA/PC binary system. Differential scanning calorimetry (DSC) of PLA/PBSL and PC/PBSL binary blends showed that individual components were immiscible. Scanning electron microscopy (SEM) analysis of these blends revealed the domain size of PBSL was ∼ 0.5–1 μm in PLA/PBSL blend, and reduced to around 0.1 μm in PC/PBSL blend. The notched Izod impact strength (IS) of PLA/PC/PBSL ternary blends increased with PBSL content up to 10 phr PBSL due to enhanced interfacial interaction and proper domain size of the dispersed phase on the basis of DMA, DSC, and SEM analysis. The heat deflection temperature (HDT) showed a maximum at 5 phr PBSL, and it dropped with increasing PBSL content which is a ductile polymer. However, the HDT of PLA/PC/EP ternary blends increased considerably with 10 phr EP due to rigid interphase formation, and it increased further with 1 phr quaternary amine catalyst, however, the IS dropped nearly the same as that of unmodified PLA/PC blend. To take advantage of the two compatibilizers, PBSL and EP were added to the PLA/PC blend at 10 phr each plus 1 phr catalyst and both IS and HDT were improved significantly over unmodified PLA/PC pair. © 2012 Wiley Periodicals, Inc. J Appl Polym Sci, 2012