Polylactide (PLA), a biobased polymer, has a short elongation at break and low impact strength, which restricted its broad application as a commodity polymer. In this paper, super-tough polylactide/crosslinked polyurethane (PLA/CPU) binary blends with CPU dispersed in the PLA matrix were prepared by reactive blending of PLA with poly(ethylene glycol) (PEG) and polymeric methylene diphenylene diisocyanate (PMDI). The in situ polymerization of PEG and PMDI in the PLA matrix formed CPU, and the interfacial compatibilization between PLA and CPU phases occurred by the reaction of NCO groups with terminal hydroxyl groups of PLA, which was confirmed by Fourier transform infrared spectroscopy. The results of a tensile test and a notched Izod impact test suggest that the elongation at break and impact strength were increased to more than 20 and 30 times those of neat PLA, respectively. The effects of PEG molecular weight (namely soft segment length of CPU) and CPU content on the phase morphology and impact strength of PLA/CPU blends were investigated systematically. The optimum CPU particle size for high impact toughness was identified to be 0.7–1.0 μm when the soft segment length and the content of CPU were in the ranges of 1000–2000 g mol⁻¹ and 20–30 wt%, respectively. The compatibility between the dispersed CPU and PLA matrix was studied by dynamic mechanical analysis through the change in glass transition temperatures of PLA and CPU components. The results suggest that the compatibility increased with increasing soft segment length and content of CPU, which was mainly due to the increased plasticization effect. With improved toughness, the PLA/CPU blends could be used as substitutes for some traditional petroleum-based polymers.