The combined influences of crystallinity and reactive compatibilizer—a multifunctional epoxide (ADR)—on morphology, tensile performance, and heat resistance of polylactide/thermoplastic polyester elastomer (PLA/TPEE) (80/20) blends were investigated. Annealing involved an isothermal cold crystallization of PLA matrix was performed to increase crystallinity of the samples. First, isothermal cold crystallization kinetics were investigated using differential scanning calorimetry measurement. It was found that the addition of ADR decreased the crystallization rate of the samples. The maximum crystallinity of the annealed samples also decreased from 40% to 34% while ADR loading increased from zero to 1.0 phr. Furthermore, influence of crystallinity on mechanical performances of the PLA/TPEE sample was researched. The heat resistance of the sample showed a significant enhancement while increasing its crystallinity. Meanwhile, the tensile ductility of the crystallized PLA/TPEE sample became very poor due to the embrittlement with increased crystallinity and the incompatibility between PLA and TPEE. However, the annealed PLA/TPEE/ADR samples with high crystallinity kept a higher tensile ductility because ADR greatly improved the interfacial compatibility. Differences in tensile fracture behaviors of the quenched and annealed PLA/TPEE samples with and without ADR were discussed in detail. At last, crystallized PLA/TPEE/ADR blends with excellent heat resistance and high tensile ductility were obtained by annealing and reactive compatibilization.