Polylactic acid (PLA) is one of the most promising polymers due to its biodegradability and other remarkable properties. It is relatively brittle, which can limit its usage in some applications. With the addition of elastomers, the toughening properties of PLA can increase greatly. However elastomers are commonly categorized as immiscible blends because of their poor adhesion between the dispersed phase and matrix. By enhancing the interaction between two component polymers, chemically or mechanically or by using a compatibilizer in the blend, the performance characteristics of the final product can be enhanced. This chapter deals with the different methods of producing PLA rubber based (nano) composite and its properties, the role of compatibilizers and various applications.