Purpose The purpose of this study is to reduce the cost of poly(butylene adipate-co-terephthalate) (PBAT) and obtain biodegradable composites with good interface compatibility, mechanical properties and shape memory properties. The unmodified and modified bamboo powder/poly(lactic acid)/PBAT (B/PLA/PBAT) composites were prepared, respectively. The effects of bamboo powder and modifiers on the interfacial compatibility, mechanical properties and shape memory properties of the B/PLA/PBAT composites were systematically investigated. Design/methodology/approach The B/PLA/PBAT composites were prepared by melt extrusion and hot-pressing with ADR 4370 and SMA-2025 as chain extender and compatibilizer, respectively. Findings The experimental results showed that the section roughness of the B/PLA/PBAT composites increased after addition of bamboo powder, but the surface roughness was slightly improved after the addition of chain extender and compatibilizer. At the same time, bamboo powder and PLA particles were well dispersed in PBAT, and the interface compatibility between the three was improved. With the increase of bamboo powder content, the tensile strength and elongation at break of the B/PLA/PBAT composites generally showed a decreasing trend, and the Young’s modulus generally showed an increasing trend. The addition of bamboo powder and modifier have little effect on the thermal stability of the PLA/PBAT composites. The B/PLA/PBAT composites have good shape memory properties and the Rf and Rr decreased slightly with the increase of bamboo powder at prestrain of 300%. From 100 °C to 120 °C, the Rr of the composites only added with ADR 4370 increased more significantly, especially when the content of bamboo powder was 10 Wt.%, the Rr of the composites was still 75.50 ± 2.61%. In general, the Rf and Rr of the typical B/PLA/PBAT composites exceeded 60.56 ± 3.47% and 71.83 ± 0.68%, respectively. Research limitations/implications The B/PLA/PBAT composites have good mechanical properties and shape memory properties, and have good application potential in biodegradable plastics and other fields. In the context of the increasing pressure on the environment caused by the proliferation of non-degradable plastic products. It is important to promote research efforts to replace traditional non-biodegradable materials with biobased or biodegradable materials that are more environmentally sustainable. Originality/value In this study, the unmodified- and modified PBAT-based composites with good mechanical properties, shape memory properties were obtained by using PLA as the filler, bamboo powder as the low-cost natural functional filler, ADR 4370 and SMA-2025 as chain extender and compatibilizer, respectively.