The purpose of this study was to investigate how optimum mechanical properties (strength-modulus-toughness) of inherently very brittle polylactide (PLA) could be obtained by reinforcing with E-glass fibers (GF) and blending with thermoplastic polyurethane elastomer (TPU). Composites and blends were compounded by twin-screw extruder melt mixing, while specimens were shaped by injection molding. SEM analyses revealed that 15 wt% GF and 10 wt% TPU domains, alone and together, could be uniformly distributed in the PLA matrix leading to significant improvements in properties. Mechanical tests indicated that use of TPU blending alone resulted in enormous increases in the ductility and fracture toughness values, while GF reinforcements led to significant increases in strength and elastic modulus values. When GF and TPU were added together, it was observed that crack deflection, debonding and fiber pull-out toughening mechanisms of GF reinforcements were as effective as the rubber toughening mechanism of TPU blending.