Generally, poly(ethylene glycol) (PEG) is added to poly(lactic acid) (PLA) to reduce brittleness and improve mechanical properties. However, shape memory properties of PEG/PLA blends suffered due to the blend’s incompatibility. To enhance shape memory abilities of the blends, 0.45% maleic anhydride-grafted poly(lactic acid) (PLA-g-MA) was used as a compatibilizer. Thermal and mechanical properties, morphologies, microstructures, and shape memory properties of the blends containing different PLA-g-MA contents were investigated. The compatibilized blend with 2 wt% PLA-g-MA exhibited enhanced tensile modulus, strength, and elongation at break, as well as a lower glass transition temperature and degree of crystallinity than the uncompatibilized blend. Results revealed that PLA-g-MA improved interfacial adhesion between phases and promoted chain entanglement. Shape fixity performance of the compatibilized blends were comparable to that of neat PLA. The compatibilized blend containing 2 wt% PLA-g-MA possessed the best shape fixity and recovery performance. Although a high recovery temperature was expected to enhance the recovery of the PEG/PLA blends, the compatibilized blends can be recovered to their original shape at a lower temperature than the PLA. This study illustrated the possibility of optimizing PLA properties to meet requirements necessary for biomedical applications.