Abstract In this paper, the interface/morphology relationship in polyethylene/TPS blends prepared by a one-step extrusion process is examined in detail. Emulsification curves tracking the change in phase size with added quantity of PE-g-MA copolymer are used to identify the critical concentration required for saturation of the interface as well as to estimate the areal density of grafted copolymer chains at the interface. The level of glycerol content in the TPS is shown to lead to different emulsification behaviors. Dynamic mechanical analysis clearly shows a partial miscibility between glycerol and starch in the TPS with glycerol-rich and starch-rich peaks being clearly identified. This phase separation is more evident in the case of high glycerol levels in the TPS (>24% glycerol). Furthermore, the glycerol-rich peak decreases in intensity with added PE-g-MA graft copolymer. At high glycerol contents (>24% glycerol) in the TPS, a 20% thermoplastic starch-based binary blend with polyethylene can reach an elongation at break value as high as 200%. When also modified at the appropriate level with a PE-g-MA copolymer, this elongation at break further increases to 600%. However, at lower glycerol contents, the elongation at break is comparatively low at 20–50% even after the addition of PE-g-MA copolymer. We explain these results through a proposed double mechanism of interfacial modification between the HDPE matrix and the TPS dispersed phase. Under dynamic melt-mixing conditions, it is suggested that a small portion of the low molecular weight glycerol-rich phase tends to migrate to the HDPE-TPS interface as predicted by Harkins spreading theory. Once at the interface, this glycerol-rich outer layer is readily deformed by an applied stress and this stress is then transferred to the starch-rich phase due to their mutual partial miscibility. Added PE-g-MA copolymer initially reacts with the glycerol-rich outer layer but if the level of copolymer is high enough, it then reacts with the starch-rich phase via a classic interfacial modification protocol. Also, both the elongation at break and impact properties dramatically increase at a copolymer level associated with interfacial saturation. The above mechanism effectively explains all the emulsification and mechanical property observations.