Blends in the composition range 20-80 wt % of cellulose acetate butyrate (CAB) and a copolymer of poly(hydroxybutyrate-co-valerate) (PHBV) were prepared by thermal compounding. Carbon-13 NMR and gel permeation chromatography showed that no transesterification occurred during thermal mixing and that little change in molecular weight occurred. Blends containing 20-50 % PHBV were amorphous, optically clear miscible blends, while the blends containing 60-80% PHBV were semicrystalline, partially miscible blends. Both thermal and dynamic-mechanical analysis revealed the presence of a high-temperature transition that was sensitive to blend composition and a low-temperature transition whose position was largely uninfluenced by the blend composition; the high-temperature transitions of the 20-50 % PHBV blends closely match calculated T(g)'s for a fully miscible blend. Carbon-13 NMR in the melt of the blend components and of a 50% PHBV blend revealed that even in a homogeneous melt, the CAB and PHBV have vastly different mobilities. It is proposed that the dual transitions in the blends containing 20-50% PHBV arise from dynamic heterogeneity and not from a classical miscibility gap. X-ray diffraction studies of the crystalline blends indicate that the PHBV crystallalizes in a morphology unique from the PHBV blend component. Blend morphology was found to strongly influence physical properties such as tensile strength and tangent modulus; blends containing 70% and 80% PHBV were found to exhibit tear strengths that were superior to either of the blend components.