This study explores enhancing polylactic acid (PLA) by blending it with recycled polycarbonate (r-PC) to improve its brittleness and thermal limitations. Recycled r-PC, obtained from compact discs, was mixed with PLA in varying ratios (100:0 to 0:100), using epoxidized soybean oil (ESO) and a chain extender (CE) as bio-based compatibilizers. Scanning electron microscopy revealed smoother fracture surfaces with ESO, indicating improved compatibility. Mechanical testing showed significant toughness enhancement, with the 30PLA70r-PC blend reaching 8725 kJ/m3—nearly ten times that of pure PLA. ESO raised tensile strength from 47.39 MPa to 52.57 MPa, while CE increased elongation at break to 32.14%. Differential scanning calorimetry indicated reduced PLA crystallinity, dropping from 68.17% to 10.32% with increasing r-PC. A new thermal transition at 225°C in ESO-rich blends suggested enhanced molecular interactions. X-ray diffraction showed a shift toward an amorphous structure at higher r-PC contents. Dynamic mechanical thermal analysis revealed improved thermal stability, with glass transition temperature rising from 61°C (PLA) to 141°C in r-PC-rich blends. These findings demonstrate that combining biodegradable PLA with r-PC and ESO produces high-performance, sustainable composites suitable for circular economy applications.