Chemically synthesized poly(4-hydroxybutyrate) (P4HB) serves as an alternative material for toughening poly(lactic acid) (PLA), but the two materials exhibit poor compatibility, and most compatibilizers fail to localize at the phase interface, resulting in inefficient toughening. In this study, a phase interface-located reactive compatibilizer, poly (glycidyl methacrylate) (PGMA), is synthesized to enhance the interfacial adhesion between PLA and P4HB, thereby improving their compatibility. The PGMA compatibilizer demonstrates a tendency to selectively disperse at the phase interface of PLA and P4HB supported by thermodynamic calculations. Compared to the PLA/P4HB blend, the PLA/P4HB/PGMA blend exhibits enhanced molecular chain entanglement and a blurrier phase interface. Consequently, the mechanical and shape memory behavior of the PLA/P4HB/PGMA blend are improved. For example, the elongation at break of the PLA/P4HB/PGMA blend increased from 20.8 % to 265.1 %, marking an increase of 12.7 times compared to the PLA/P4HB blend. Due to its small molecular weight, the (onset degradation temperature) of PGMA is only 180.3 °C. Fortunately, the of the PLA/P4HB/PGMA system exceeds 220 °C after the chain expansion reaction, indicating a significant improvement in thermal stability. Thus, the phase interface-located chain expansion reaction offers an effective approach to improving the compatibility of PLA/P4HB blends while maintaining their high thermal stability.