In recent years, there has been growing interest in using plant fibers to reinforce materials in modern manufacturing. This study focuses on the development of a novel biocomposite made from an enset fiber (EF) and polylactic acid (PLA) matrix using compression molding at a hot-pressing temperature of 170 °C and pressure of 7 MPa for 7 min. Before preparing the biocomposites, the fibers were chemically modified with different concentrations of sodium hydroxide (NaOH) and cut into shorter fibers with a 40 mm average length in size. Then, the extent of modifications on the mechanical properties, dynamic mechanical behavior, morphology, and water absorption were investigated. The tensile, flexural, and Charpy impact tests were carried out to evaluate the mechanical properties of the samples as per ASTM standards. Moreover, dynamic mechanical analysis (DMA) and the water absorbency of the biocomposites were investigated, and the results were graphically shown and explained. The results indicate that the biocomposite treated with 5% NaOH exhibited significant improvements in tensile strength, flexural strength, and impact strength compared to the untreated composite. The tensile modulus and flexural modulus of 5% NaOH-modified enset fiber biocomposite were also enhanced by 55.8% and 70.3% compared to untreated enset fiber biocomposite. The highest tensile strength, flexural strength, and impact strength found for the PLA composite reinforced by EF treated with 5% w/v NaOH solution were 20.16 MPa, 30.21 MPa, and 12.02 kJ/m², respectively. In general, the modification of natural fibers improves adhesion at the interface and therefore decreases the water absorption and improves the dynamic mechanical properties of biocomposites.