This study investigates the crystallization, microstructure, and performance of poly(lactic acid)/poly(butylene succinate) (PLA/PBS) thin films processed through blown film extrusion and biaxial orientation (BO) at various blend ratios. Succinic anhydride (SA) was used to enhance interfacial adhesion in PLA-rich blends, while blends near 50/50 formed co-continuous phases without SA. Biaxial stretching and annealing, adjusted according to the crystallization behavior of PLA and PBS, significantly influenced crystallinity, crystallite size, and molecular orientation. Biaxial stretching induced crystallization and ordered chain alignment, particularly at the cold crystallization temperature (Tcc), leading to a 70–80-fold increase in impact resistance compared to blown films. Annealing further enhanced crystallinity, especially at the Tcc of PLA, resulting in larger crystallite sizes. BO films demonstrated reduced thermal shrinkage due to improved PLA crystalline structure, whereas PLA-rich blown films showed higher shrinkage due to PLA’s lower thermal resistance. The SA-miscibilized phase reduced oxygen transmission in blown films, while BO films exhibited higher permeability due to anisotropic crystal orientation. However, the annealing of BO films, especially at high temperature (Tcc of PLA), further lowered oxygen permeability by promoting the crystallization of both PLA and PBS phases. Overall, the combination of SA compatibilization, biaxial stretching, and annealing resulted in substantial improvements in mechanical strength, dimensional stability, and oxygen barrier properties, highlighting the potential of these films for packaging applications.