Poly(3-hydroxybutyrate-co-3-hydroxyvalerate) (PHBV) and cellulose acetate (CA) were blended in the presence of a plasticizer, i.e., triethyl citrate (TEC), and a chain extender, i.e., poly(styrene-acrylic-co-glycidyl methacrylate). To increase the ductility and impact properties of PHBV and to investigate a new biodegradable PHBV-based blend for sustainable packaging, CA was compatibilized with TEC. PHBV and plasticized CA (pCA) blends showed complete immiscibility through separate glass transition and melting peak temperatures in differential scanning calorimetry (DSC), despite the similar Hansen solubility parameters of PHBV, CA, and TEC, indicating partial miscibility. Phase separation between PHBV and pCA was clearly observed by scanning electron microscopy (SEM). PHBV/pCA (70:30) blends had improved impact strength, exceeding that of neat PHBV and pCA, which is attributed to PHBV porosity induced by degradation from the high processing temperature. During processing, the plasticizer migrated from CA to PHBV and partially plasticized it, as evidenced through DSC analysis. The melt temperature of PHBV was reduced, which was confirmed by double melting peaks, representing the formation of secondary crystallites at a lower temperature. Due to processing at high temperatures (210–220 °C), significant porosity was observed in the PHBV/pCA 30:70 blend in SEM analysis. Consequently, the impact strength was improved by 110% as compared to that of virgin PHBV. The addition of CE had no effect on the mechanical properties but did make the PHBV/pCA blends morphologically uniform.