Starch foam has attracted significant attention as an alternative to expanded styrene (EPS) foam owing to its abundance and biodegradability. Despite these merits, its limited thermal insulation and flexibility compared to EPS have hindered its utilization in packaging. Herein, we report the effect of blending with starch/PBAT on foaming behavior and physical properties during foaming processing. We fabricated a starch/PBAT blend with systematically controlled blending ratios (0, 10, 15, 20, and 25 wt%) to analyze their effect on the interaction and characteristics of blended foam. The blending of starch and PBAT significantly reduced complex viscosity, enhancing resin flow during the foaming process. This improvement in resin flow led to increases in expansion ratio while reducing density and cell wall thickness. The thermo-insulation performance improved to 0.043 W/mK with 20 wt% of PBAT due to the enhanced expansion ratio and cell morphology. Additionally, the flexural strain at break improved significantly from 2.8 ± 0.6% to 9.6 ± 1.0% with increasing PBAT content. Enhanced water resistance was also observed, demonstrated by a reduction in water absorption and an extension of dissolution time. Overall, these findings underscore the potential of starch/PBAT foam to improve the thermal-insulating property, flexibility, and water resistance while maintaining their biodegradability and sustainability.