Modified polycaprolactone was synthesized by melt reaction of PCL and reactive monomers such as glycidyl methacrylate (GMA) and maleic anhydride (MAH) in the presence of benzoyl peroxide in Brabender mixer. MAH showed a different grafting phenomenon compared to GMA. The reaction mechanism was discussed with different reactive monomers. Reactive blends of the PCL-g-GMA and the gelatinized starch with glycerin were prepared and their mechanical properties and biodegradabilities were investigated. Reactive blends of PCL-g-GMA and starch showed well-dispersed starch domain in the matrix and better mechanical strength than the unmodified PCL/starch blend. However, the reaction between PCL-g-GMA and starch induced a crosslinking during the reactive blending and this crosslinking in the blend lowered the biodegradation of the blend during the composting test. The biodegradability was investigated by the weight loss and surface morphology change of the blend in the composting medium.