Poly(hydroxybutyrate-co-valerate) (PHBV), a biodegradable thermoplastic polymer, has attracted much attention because of increasing interest in protection of environment. PHBV is brittle, thus has restricted application. Improvement of its toughness has been attempted by blending poly (caprolactone (PCL). In this study, PCL helps in improving elongation at break and impact properties of PHBV. PHBV/PCL blends were blended using internal mixer. Differential scanning calorimetry (DSC) was used to determine the thermal properties of the blends and tensile and impact test for the mechanical test of the blends. There are two melting peaks shown in the DSC data of PHBV/PCL due to melting of PHBV and PCL. 60/40 ratio of PHBV/PCL was chosen as the optimum composition as it showed the highest elongation at break with 4.2 % improvement compared to pure PHBV. This blend ratio also has the lowest melting temperature of PHBV among ratio studied. Although the properties of PHBV/PCL blends were better than those of neat PHBV, the immiscibility of PHBV and PCL shown from DSC results inhibits further improvement of the properties of the blend. To improve the miscibility of the blends, 1 phr of epoxidized palm oil (EPO) was added to 60/40 blends. EPO has been proven to act as a plasticizer that increased the elongation at break and impact strength of the PHBV/PCL blends. This indicates that although both PHBV and PCL blends are not fully miscible, interaction exists between PHBV, PCL and EPO.