The biodegradability of poly(ε-caprolactone) (PCL) was studied in blends and composites of modified and granular starch. Four types of PCL-starch compositions were prepared: (i) PCL-granular starch blends; (ii) hydrophobic coating of starch particles by n-butylisocyanate (C4 starch) and octadecyltrichlorosilane (C18 starch), followed by melt blending with PCL; (iii) PCL-starch blends compatibilized by PCL-g-dextran grafted copolymer (PGD); and (iv) PCL-grafted starch particles (PGS) as obtained by in situ ring-opening polymerization of caprolactone (CL) initiated directly from hydroxyl functions at the granular starch surface. Biodegradability of these materials was measured by monitoring the percentage of weight loss in composting and the rate of fungal colonization when samples were used as a sole carbon source for fungus (A. niger). Intrinsic viscosity [η] of host PCL chains was measured after extraction of composted samples in boiled chloroform. SEM was used to study the surface morphology after compost incubation of the samples. The inherent biodegradability of host polymer was enhanced with surface compatibilization during composting for longer incubation. It was observed that the weight loss during composting increased with the decrease in interfacial tension between filler and polymer. In general, it was concluded that inherent biodegradability does not depend very significantly on the concentration of starch in the polyester matrix, but on the compatibilization efficiency. The effect of the PCL fraction in the graft copolymer, when used as compatibilizer, was also studied on the biodegradability of the host polymer.