Poly(butylene adipate-co-terephthalate) (PBAT) is a promising biodegradable polyester, but its low strength limits broader application. In principle, blending PBAT with polylactide (PLA) can combine toughness and stiffness, yet severe immiscibility usually leads to poor interfacial adhesion and unsatisfactory overall performance. Here, a bio-based lignin-epoxy composite compatibilizer (E-FL) was developed by premixing ethanol-fractionated lignin (FL) with a protocatechuic-acid-derived epoxy compound and introducing it into PBAT/PLA blends through reactive melt processing. Fractionation enriched lignin fractions with lower molecular weight and higher hydroxyl content, thereby improving reactivity and dispersibility. During melt blending, E-FL promoted interfacial reactions with PBAT and PLA end groups, increased melt torque and molecular weight, refined the dispersed PLA domains, and reduced the Tg gap between the two phases. At an E-FL loading of 3 wt%, the blend exhibited the best balance of performance, with a tensile strength of 36.1 MPa, an elongation at break of 1035%, and a fracture toughness of 238.3 MJ/m3. This work provides a sustainable strategy for converting lignin into a high-efficiency reactive compatibilizer and offers a practical route to high-performance PBAT-based biodegradable blends.