The blend of poly(butylene adipate-co-terephthalate) (PBAT) and thermoplastic starch (TPS) are a promising way to get a new class of bio-compostible plastic, balance the cost effective issue and good mechanical properties. Blends of both polymers are immiscible in nature. Therefore, to make the blend to be more compatible, some block-copolymer compatibilizer can be introduced. Reactive blend is one of effective ways to create such compatibilization at the interface. The objective of this work was to study the reactive blends of PBAT/TPS in comparison to the physical blend. The reactive blends were prepared in both an internal mixer and a twin-screw extruder. For reactive blends in twin-screw extruder, PBAT, starch, glycerol and reactive agent were all pre-mixed and blended in an extruder on one step process. The weight ratio of PBAT:TPS (starch + glycerol) was fixed at 60:40. The reactive agent maleic anhydride (MA) and peroxide (Luperox® 101) were used at very low level 0-0.1 phr. The mechanical properties, morphology and flows property of blends were characterized using tensile machine, scanning electron microscope (SEM) and melt flow indexer (MFI). The internal mixer torque showed a decrease in a final torque value of TPS when MA being added, confirming the chain scsision reaction of TPS. The finer morphogy and better mechanical properties were obtained in the reactive blend with 0.1 phr of MA and 0.1 phr of peroxide.