Improving the processability and physical properties of sustainable biobased polymers using biobased fillers is essential to preserve its biodegradability and make them suitable for different end user applications. Herein, we report the use of spray-dried lignin-coated cellulose nanocrystals (L-CNCs), a biobased filler, to modify the rheological and thermo-mechanical properties of poly­(lactic acid) (PLA) composites. The lignin coating on CNCs not only improved the dispersion of CNCs but also enhanced their interfacial interaction with the PLA matrix, resulting in a significant improvement in rheological and thermo-mechanical properties. The rheological percolation threshold concentration obtained by power law analysis for PLA/L-CNC composites was found to be 0.66 wt %, which is significantly lower than the reported values for other PLA/CNC composites. Such a low rheological percolation concentration of L-CNCs can be attributed to excellent dispersion of L-CNCs in the PLA matrix. Addition of only 0.5 wt % L-CNCs to the PLA matrix resulted in an almost 60% improvement in storage modulus, relative to neat PLA, as measured by dynamic mechanical analysis. This improvement in mechanical properties can be attributed to a significant increase in the degree of crystallinity of the PLA. Excellent dispersion and compatibility of L-CNCs with PLA allowed generation of a high density of nucleating sites resulting in an increase in the degree of crystallinity of the PLA matrix. Improvement in the storage modulus at higher loading of L-CNCs can be attributed to both high crystallinity and reinforcement by L-CNCs. We have readily prepared a fully biobased transparent and potentially biodegradable PLA film through film blowing by addition of just 0.3 wt % L-CNCs in the PLA matrix. This present study clearly demonstrates that L-CNCs can serve as excellent fillers for PLA for the development of fully biobased composites.