SummarySawdust/poly(lactic acid) (PLA) composites were prepared using a melt blending process. Sawdust content was 30 wt%. The effects of alkali treatment and poly(butylene adipate‐co‐terephthalate) (PBAT) content on mechanical, thermal, and morphological properties of the composites were investigated. With the addition of sawdust into PLA, tensile modulus increased whereas tensile strength, elongation at break, impact strength, and thermal stability decreased. Alkali treatment improved the interfacial adhesion between sawdust and PLA matrix leading to the enhancement in mechanical properties and thermal stability of the composites. PBAT was used to improve toughness of the composites. PBAT content was varied as 10, 20, and 30 wt%. With increasing PBAT content, elongation at break and impact strength of the composites increased whereas tensile strength and tensile modulus decreased due to the presence of soft elastomeric phase that exhibited high flexibility and toughness. Additionally, thermal stability of the composites improved with increasing PBAT content. SEM micrographs revealed enhanced filler‐matrix interfacial adhesion and some features of ductile fracture in the composites toughened with PBAT.