The physical, viscoelastic, thermal and mechanical properties of poly(lactic acid) (PLA) as a well-known biodegradable plastics were enhanced by incorporating a chemically modified biomass without sacrificing the biodegradability of the matrix. Rice straw after milling was benzylated with NaOH and benzyl chloride solution at reflux temperature for 6 h. The weight gain percentage of benzylated rice straw (BRS) was 145% and some thermoplasticity was induced in the material. The results showed that the chemical modification successfully reduced the glass transition temperature (Tg) of rice straw to about 170 °C. By adding the benzylated rice straw at an optimal loading, the mechanical properties of PLA, i.e., Young’s modulus, tensile strength as well as toughness, were considerably improved as well as Tg, crystallinity and processability. Higher Tg, intensified non-terminal behaviour, and microscopic observations of the resultant PLA green composites demonstrated the strong interactions between PLA chains and the plasticized lignocellulosic polymers. Despite the positive effect of benzylated rice straw in PLA, compounding of the organically modified nanoclay with the biocomposites did not change the latter properties as expected due to the poor dispersion state of nanoparticles in the matrices.