The blend of a gelatinized starch and poly(epsilon-caprolactone) (PCL) was prepared and the effect of starch gelatinization on the mechanical properties of the blend was studied. The gelatinization of starch resulted in good dispersion of the starch in the PCL matrix and a higher modulus and strength of the blend. The mechanical properties of the starch/PCL/poly(ethylene glycol) (PEG) blends were also investigated. From the change of the toughness of the blends with the PEG molecular weight, it was found that the blend containing PEG of molecular weight 3400 shows the highest tensile toughness. It was also found from the SEM images that the blend containing PEG of molecular weight 3400 had the smallest domain size of the starch dispersion phases, which implies that PEG of the proper molecular weight could effectively stabilize the interface of the starch/PCL blend. The PEG of the proper molecular weight seems to locate mainly at the interface between the starch and PCL phases and to interact with both the starch phase and the PCL phase. The interactions between starch and PEG and between PCL and PEG in the blend were studied using DSC and FTIR techniques. (C) 2000 John Wiley & Sons, Inc.