Polycaprolactone (PCL) was blended with corn starch to produce biodegradable compost films and the biodegradability and mechanical properties were investigated. As the compatibilizer for the immiscible PCL/starch blend, 2-hydroxyethylmethacrylate (HEMA)-PCL macromer was grafted onto starch by initially grafting HEMA to starch and then grafting of PCL onto HEMA via ring opening polymerization of $varepsilon$-caprolactone. When biodegradability of the PCL grafted starch-g-DEMA copolymers was compared with that of starch by the modified Sturm test, graft copolymers degraded at much slower rates due to the presence of the non-degradable HEMA. With the addition of the graft copolymer up to 5 wt% to the blend, the elongation-at-break of the starch/PCL blend increased substantially, while the tensile strength and modulus did not change much. SEM observation of the blend containing 2 wt% copolymer clearly indicated that the interfacial adhesion between the starch and PCL was strengthened by the copolymer.