Wood fibre reinforced polyhydroxyalkanoate (PHA) composites have attracted significant interest as promising new sustainable biocomposites. However, their manufacture can be challenging due to PHA's relatively low thermal stability and melt viscosity. There is currently a lack of understanding of the effect of extrusion processing parameters on the molecular weight of the PHA matrix and, ultimately, on the mechanical properties of the composites. In this study, we show that commercially-relevant mechanical properties of a wood-poly(hydroxybutyrate-co-hydroxyvalerate) (PHBV) composite can be achieved through extrusion processing, even at temperatures as high as 190 °C, by adjusting screw speed and feeding rate, and consequently the induced shear rate and residence time. Moreover, the mechanical properties of 40 wt% wood-PHBV were found to be superior to properties previously reported in the literature. Relative to neat PHBV, a 73% increase in modulus and 80% retention of tensile strength was achieved. A Taguchi approach to experimental design was adopted to systematically investigate the effect of extrusion parameters (temperature profile, screw speed, feeding rate, and fibre mixing) on the processing of neat PHBV biopolymer and wood-PHBV composites with wood contents of 10, 20, 30, and 40 wt%. Evaluation of the mechanical performance was conducted through testing of tensile strength, tensile modulus and strain at maximum load. Changes in molecular weight were analysed via gel permeation chromatography (GPC). For both neat PHBV and wood-PHBV composites, molecular weight Mw was found to decrease under high shear stress and long residence time from 550-650 kDa to 350–550 kDa. However, Mw reductions were not enough to result in a decrease of mechanical performance. This discovery is significant for industrial-scale production as it shows that the processing window for wood-PHBV composites is not as narrow as expected, because thermal degradation can be limited by optimising a combination of processing parameters.