The present work studies the thermal stability during and after processing of composites of poly(3-hydroxybutyrate) (PHB) – a fully biodegradable semi-crystalline thermoplastic obtained from renewable resources through low-impact biotechnological process, biocompatible and non-toxic – and vegetable fiber from the fruit (coconut) of babassu palm tree. PHB/babassu composites with 0, 5, 10 and 20% load were prepared in a laboratory internal mixer. Two fractions of babassu fiber with different particle sizes were compounded with PHB and samples for thermal testing were molded by compression. The effect of loading level and processing conditions on torque, temperature and mechanical energy dissipation were studied using a new engineering model. It was was found that PHB degrades during processing at temperatures slightly above the melting point. To minimize thermal degradation stabilizer and chain extender additives were incorporated, with mixed results. These findings were confirmed by dependence of the melt fow rate on the processing temperature. The stability of resin, vegetable fiber, and compounds was further ascertained by thermogravimetric analysis.