Abstract: Poly(lactic acid) (PLA) has the advantages of high mechanical properties, non-toxicity, renewablility, biodegradability and biocompatability. PLA has become one of the most widely used biobased plastics. However, PLA also has the disadvantages of high cost, high brittleness and low ductility, which hinders its further application in some fields. Thus, a series of bio-based poly(epoxidized palm oil) (PEPO)/PLA blends were prepared by twin-screw extrusion and injection molding techniques. The crystallization behavior, rheological properties, mechanical properties, thermal stability and micro-morphology of the blends were studied. The dynamic vulcanization mechanism of PEPO and PLA blends as well as the toughening mechanism of PEPO rubber phase in PLA were investigated. The results show that during the melt-blending of epoxidized palm oil (EPO) and PLA, EPO can self-polymerize with the help of the cationic initiator, thus forming PEPO rubber phase in PLA matrix. The formation of two-phase structure endows the blends plastic deformation under stress, leading to significant toughening efficiency on PLA. With an addition of 20wt% PEPO, the elongation at break and tensile toughness of the blend increase from 10% and 4.7 MJ/m³ (pure PLA) to 100% and 30.4 MJ/m³, respectively; but the tensile strength, tensile modulus, storage modulus and glass transition temperature of the blends decrease.