Lignin, a second abundant biopolymer on earth, was blended with poly(lactic acid) (PLA) before solvent casting into blend films. Lignin was chemically modified by acetylation to form ester functional groups in place of polar hydroxyl groups, which improved miscibility of lignin and PLA. PLA/acetylated lignin blends exhibited greater compatibility than PLA/lignin. The miscibility was analyzed using solubility parameter calculation with group contribution method (GCM). The determination of chemical modification of lignin was studied using FT-IR and 1H-NMR. The influence of chemical modification and physical blending of lignin with PLA on the resulting films was studied by analyzing morphology of the films using optical microscopy and UV-vis spectroscopy. The acetylated lignin was monodispersed in PLA showing less particle aggregation compared to lignin. The effect of blend composition on the phase behavior was studied by differential scanning calorimetry (DSC). Considering the great compatibility and blend properties of PLA/acetylated lignin blend, it may be utilized in various eco-friendly industry fields.