The widespread application of biodegradable polylactide (PLA) is hindered by its brittleness. Polyethylene glycol (PEG) is commonly utilized as a plasticizer because of its favorable compatibility with PLA. However, the incorporation of PEG considerably diminishes the tensile strength of PLA. To address this issue, reactive isocyanate-modified graphene oxide (mGO) was synthesized and used as an enhancer in PLA/PEG blends. By virtue of the reaction between the isocyanate group in mGO and the terminal hydroxyl groups of PLA and PEG, graphene-based polyurethane (PU) in-situ formed and enhanced the interface between GO and the matrix. Consequently, the PLA/PEG/mGO composites exhibit simultaneously improved tensile and impact strengths, achieving an increase of 20.6 % and 29.4 %, respectively, compared to PLA/PEG blends. Moreover, the in situ formed PU reduces the relaxation time of the molecule motion and improved the entanglement density, thereby improving the shape-memory recovery rate and final recovery degree of the composites. This work provides a facile method to simultaneously improve the dispersion of GO and enhance its interface with polymer, thereby supplying well comprehensive properties of PLA and extending the applications of biodegradable polymers.