In the presence of dicumyl peroxide (DCP), biobased thermoplastic vulcanizates (TPVs) composed of poly(lactic acid) (PLA) and epoxidized natural rubber (ENR) were prepared through dynamic vulcanization. Interfacial in situ compatibilization between PLA and ENR phases was confirmed by Fourier transform infrared spectroscopy (FT-IR). A novel "sea-sea" co-continuous phase in the PLA/ENR TPVs was observed through scanning electron microscopy (SEM) and differed from the typical "sea-island" morphology that cross-linked rubber particles dispersed in plastic matrix. A sharp, brittle-ductile transition occurred with 40 wt % of ENR, showing a significantly improved impact strength of 47 kJ/m(2), nearly 15 times that of the neat PLA and 2.6 times that of the simple blend with the same PLA/ENR ratio. Gel permeation chromatography (GPC) and dynamic mechanical analysis (DMA) results suggested that a certain amount of DCP was consumed in the PLA phase, causing a slight cross-linking or branching of PLA molecules. the effects of various DCP contents on the impact property were investigated. The toughening mechanism under impact testing was researched, and the influence factors for toughening were discussed.