The growing demand for sustainable materials is driving both academia and industry to replace conventional oil-based polymers with biodegradable alternatives. Blending biopolymers is an effective strategy for tailoring and improving the mechanical, thermal, and processing properties of these systems. However, differences in the nature of the components can make it challenging to develop polymer blends with good morphology and thermal stability, potentially affecting their overall performance. In this study, two biodegradable polymers commonly used in packaging—polylactic acid (PLA) and poly(butylene adipate-co-terephthalate) (PBAT)—were blended, and their morphological, rheological, and structural evolution during extrusion was analyzed. An experimental prototype extruder enabled in-line monitoring of the blends throughout the extrusion process. The results showed that screw speed and feed rate significantly influence material properties. Specifically, low screw speeds and feed rates promote thermo-mechanical degradation, leading to a reduction in molecular weight, without excluding possible branching or cross-linking phenomena due to the presence of PBAT. After the experimental tests, Ludovic^®, a simulation software for extrusion processes, was used to better understand how processing parameters affected the blends. The simulation also helped identify strategies to reduce degradation and optimize the extrusion process for future applications. This combined approach offers useful insights to enhance biodegradable blend performance in industry.