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• Oleic acid-modified ZnO nanoparticles (O-ZnO NPs) were synthesized and subsequently incorporated into PLA/LLDPE blends via melt blending at 165°C in the presence of an LLDPE-g-OA (LO) compatibilizer. • The incorporation of 5 wt% O-ZnO NPs significantly enhanced the tensile strength, elongation at break, Young’s modulus, and thermal stability of the compatibilized PLA/LLDPE/O-ZnO (cPLO) nanocomposites. • The improved interfacial compatibility led to reduced water absorption, accelerated soil biodegradation, and effective antibacterial activity against Staphylococcus aureus . The increasing demand for safe and environmentally friendly packaging materials has driven the development of biodegradable PLA-based polymers; however, the limited mechanical strength and thermal stability of PLA restrict their broader application. This study investigates the incorporation of oleic acid–modified zinc oxide nanoparticles (O-ZnO NPs) into compatibilized PLA/LLDPE nanocomposites to improve their physical, mechanical, thermal, and morphological properties. O-ZnO NPs were synthesized via surface modification of ZnO with oleic acid (OA), resulting in improved compatibility with the polymer matrix while preserving the intrinsic crystalline structure of ZnO. Compatibilized PLA/LLDPE/O-ZnO (cPLO) nanocomposites were prepared by melt blending PLA and LLDPE in the presence of LLDPE-g-OA (LO) compatibilizer, followed by the incorporation of O-ZnO NPs at various loadings. The results demonstrate that the incorporation of O-ZnO NPs significantly enhances the nanocomposite's performance by strengthening the interfacial interactions between the immiscible PLA and LLDPE phases. Mechanical testing showed an increase in Young’s modulus from 438 MPa to 493 MPa, accompanied by an improvement in elongation at break from 43% to 54%, indicating simultaneous enhancement of stiffness and ductility. Thermal analysis revealed improved thermal stability, which is attributed to restricted polymer chain mobility and more efficient stress transfer at the filler–matrix interface. Morphological observations confirmed a more homogeneous nanoparticle dispersion and reduced phase separation within the polymer matrix. The incorporation of O-ZnO NPs reduced water absorption to 0.682% and increased biodegradation from 14.5% to 15.8% after 90 days of soil burial, indicating improved hydrophobicity while maintaining environmental degradability. The nanocomposites also exhibited antibacterial activity against Staphylococcus aureus , with inhibition zones exceeding 8 mm. O-ZnO NPs effectively improve interfacial compatibility in compatibilized PLA/LLDPE blends, resulting in balanced mechanical reinforcement and multifunctional properties suitable for semi-biodegradable packaging applications.