Blends of two biocompatible polymers: thermoplastic polyester-urethane (TPU) and polylactic acid (PLA) were studied. The effect of the blending ratio on blend morphology and properties was examined by running a series of blends from 10 to 80 wt % of PLA. Increasing TPU concentration in the blends lowered the glass transition and melting point of PLA indicating that the components were compatible and partially miscible. The blends with 10–40 wt % PLA are hard, reinforced elastomers, while those with 60–80 wt % PLA are tough plastics. Cocontinuous morphology was suggested in samples with 40 and 50 wt % PLA. Inversion points between 30 and 40 wt % PLA (from globular phase is dispersed in the matrix to a cocontinuous morphology) and between 50 and 60 wt % PLA (a transition from cocontinuous to TPU dispersed in the PLA matrix) were observed. Elastomers with higher PLA content and intermediate morphology displayed a combination of high tensile strength, hardness, relatively high elongation and modulus. New materials have potential applications in the medical field. © 2014 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2014, 131, 41104.